UK wagering firms bet on US after sports betting wager ruling
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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, new guidelines on wagering entered result in Delaware, a tiny east coast state about two hours from Washington.

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

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable 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 financial analyst David Jennings, who heads leisure research study at Davy.

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

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But the industry states relying on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competitors from established regional interests.

"It's something that we're actually concentrating on, but similarly we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external released 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 wagering, leaving that concern to regional legislators.

That is expected to lead to substantial variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential profits from $4.2 bn to practically $20bn yearly depending on elements like how lots of states relocate 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 big'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... are taking a look 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly earnings.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering stores are a regular sight.

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

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

States have also been sluggish to legalise numerous forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is typically viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he states UK firms need to approach the marketplace thoroughly, selecting partners with caution and preventing bad moves that might cause regulator reaction.

"This is an opportunity for the American sports betting bettor ... I'm not sure whether it is an opportunity for business," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of profits as an "stability charge".

International companies face the included obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to defend their grass.
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Analysts state UK firms will need to strike collaborations, offering their know-how and innovation in order to make inroads.

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

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

'It will simply depend'

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

The business has been buying the US market because 2011, when it acquired three US companies to establish a presence in Nevada.

William Hill now utilizes about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions together with a local designer 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 substantial brand presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."

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

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