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UK wagering companies bet on US after sports betting wager judgment
bit.ly
5 June 2018

By Natalie Sherman
bit.ly
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 into effect in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.
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The market sees a "when in a generation" chance to develop a brand-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 competition and tougher guidelines from UK regulators, the timing is particularly opportune.

Why the gambling market faces an unpredictable future

How does prohibited sports betting wagering work and what are the worries?

But the market states relying on the US remains a risky bet, as UK companies deal with complicated state-by-state regulation and competitors from established local interests.

"It's something that we're actually concentrating on, however equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Take some time'

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

Firms are wishing to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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

That is expected to lead to significant variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics estimated 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 experts KPMG.

Now, he stated: "I believe the majority of individuals ... are taking a look at this as, 'it's an opportunity however it's not going to be $20bn and it's going to be state by state and it's going to take some 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 yearly earnings.

But bookmakers face a far different landscape in America than they do in the UK, where wagering stores are a regular sight.

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually likewise been sluggish to legalise many forms of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is usually viewed in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he states UK firms ought to approach the market carefully, picking partners with caution and avoiding missteps that might cause regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is a chance for business," he says. "It actually is dependent on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to gather a portion of income as an "stability cost".

International companies deal with the included challenge of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to safeguard their grass.

Analysts say UK companies will need to strike partnerships, offering their proficiency and technology in order to make inroads.
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They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

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

'It will simply depend'

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

The company has been buying the US market given that 2011, when it purchased three US companies to develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has actually become a home name in Nevada but that's not always the objective everywhere.
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"We definitely intend to have an extremely significant brand existence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

"The US is going to be the greatest sports betting wagering market worldwide," he included. "Obviously that's not going to take place on day one."

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