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UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on wagering entered into impact in Delaware, a tiny east coast state about two hours from Washington.

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

The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable 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 monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.

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But the industry states counting on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're actually focusing on, but similarly we don't desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external published in January.

Firms are wanting to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.

The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that to regional lawmakers.

That is expected to lead to substantial variation in how companies get licensed, where sports betting can occur, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential earnings varieties from $4.2 bn to nearly $20bn annually depending upon aspects like the number of states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think a lot 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 take time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual income.

But bookies deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have likewise been slow to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is generally seen in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he says UK companies should approach the marketplace carefully, choosing partners with caution and avoiding missteps that might cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for company," he says. "It truly depends on the outcome of [state] legislation and how the service operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a percentage of earnings as an "integrity charge".

International business deal with the added obstacle of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are looking for to protect their grass.

Analysts say UK companies will require to strike partnerships, offering their knowledge and innovation in order to make inroads.

They point to SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.

The business has actually been purchasing the US market because 2011, when it bought 3 US firms to establish an existence in Nevada.
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William Hill now utilizes about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.

It works as threat manager for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.

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

"We definitely mean to have a very considerable brand presence in New Jersey," he said. "In other states, it will just depend upon guideline and potentially who our regional partner is."

"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to occur on the first day."

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