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UK sports betting companies gamble on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new rules on wagering entered effect in Delaware, a small 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 could 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 "as soon as in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads research at Davy.
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For UK companies, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the industry states relying on the US stays a dangerous bet, as UK companies face complicated state-by-state policy and competitors from established local interests.

"It's something that we're really concentrating on, however similarly we do not desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are hoping 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 judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.

That is expected to result in substantial variation in how firms get certified, where sports betting wagering can take place, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to almost $20bn annually depending upon elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
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Now, he said: "I think many 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, forecasts that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in yearly earnings.

But bookmakers face a far various landscape in America than they carry out in the UK, where sports betting shops are a regular sight.

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

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

States have likewise been slow to legalise numerous types of online gaming, despite a 2011 Justice Department opinion that appeared to remove barriers.

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

David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he says UK firms need to approach the market carefully, choosing partners with caution and preventing bad moves that could cause regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for service," he states. "It actually is reliant on the outcome of [state] legislation and how business operators pursue the chance."
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'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of income as an "stability fee".
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International companies face the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to protect their turf.

Analysts say UK companies will need to strike collaborations, using their know-how and technology in order to make inroads.

They indicate SBTech's current announcement that it is providing technology 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 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 company has actually been investing in the US market given that 2011, when it purchased 3 US firms to develop a presence in Nevada.

William Hill now employs about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.

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

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

"We certainly mean to have a really considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our local partner is."

"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to happen on day one."

More on this story

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