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UK wagering firms bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business reporter, New York
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It's high stakes for UK firms as sports betting starts to spread in America.

From Tuesday, brand-new rules on sports betting came 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.
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The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

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

For UK firms, which are coming to grips with consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

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But the industry states counting on the US stays a risky bet, as UK companies face complex state-by-state policy and competition from established regional interests.

"It's something that we're truly concentrating on, however equally we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.
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'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income 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 wagering.

The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to local legislators.

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

Potential profits ranges from $4.2 bn to nearly $20bn each year depending upon factors like the number of states move 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 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly earnings.

But bookies face a far various landscape in America than they perform in the UK, where wagering stores are a frequent sight.

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just 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 also been slow to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting is typically viewed in its own category, "it plainly remains to be seen whether it gets the kind 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 previous president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a specialist, he states UK companies should approach the market thoroughly, picking partners with care and avoiding bad moves that could result in regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to gather a portion of revenue as an "stability charge".

International business face the included challenge of an effective existing video gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their turf.

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

They point to SBTech's current statement that it is supplying 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 collaborations 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 company has been purchasing the US market given that 2011, when it purchased three US companies to establish a presence in Nevada.

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

It works as risk supervisor for the Delaware Lottery and has actually invested millions together with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a family name in Nevada however that's not always the objective all over.

"We certainly plan to have a very substantial brand existence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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