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UK sports betting firms gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business reporter, New York

It's high stakes for UK firms as sports betting wagering starts to spread out in America.

From Tuesday, new rules on wagering entered effect in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The industry sees a "when in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry says counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're truly focusing on, however equally we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external released in January.

Firms are hoping to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is expected to lead to considerable variation in how companies get licensed, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to nearly $20bn annually depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think the majority of people ... are looking at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in yearly profits.

But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.

US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.

In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have actually likewise been sluggish to legalise lots of types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting wagering is normally viewed in its own classification, "it clearly stays to be seen whether it gets the type of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the former primary executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he says UK companies must approach the market thoroughly, selecting partners with caution and preventing errors that could result in regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is a chance for service," he states. "It really depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of earnings as an "stability fee".

International companies face the added difficulty of an effective existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to protect their grass.

Analysts say UK companies will need to strike collaborations, providing their expertise and innovation in order to make inroads.

They point to SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the realities.

The business has been investing in the US market since 2011, when it bought three US companies to develop an existence in Nevada.

William Hill now employs about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a household name in Nevada however that's not necessarily the objective all over.

"We definitely mean to have an extremely considerable brand name existence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our is."

"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to take place on the first day."

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