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UK sports betting companies gamble on US after sports betting wager judgment
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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 wagering starts to spread out in America.

From Tuesday, brand-new rules on sports betting entered result in Delaware, a tiny east coast state about two hours from Washington.
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Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

The modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

The industry sees a "when in a generation" chance to a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and harder rules from UK regulators, the timing is particularly appropriate.

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

"It's something that we're truly concentrating on, however equally we do not wish to overhype it," stated 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 gaming profits in 2015, according to a report by Technavio, external published in January.

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

The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local lawmakers.

That is expected to lead to significant variation in how firms get licensed, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to practically $20bn yearly depending upon aspects like how many 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'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's a chance but 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 in some kind by 2023, developing a market with about $6bn in annual income.

But bookmakers 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 minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.

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

States have likewise been sluggish to legalise many kinds of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is usually viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher 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 an expert, he says UK companies need to approach the market carefully, picking partners with caution and preventing missteps that might result in regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for organization," he states. "It truly is reliant on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity cost".

International companies face the included challenge of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to protect their grass.

Analysts say UK firms will require to strike collaborations, providing their competence and technology in order to make inroads.
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They indicate SBTech's current announcement that it is providing 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 everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has been buying the US market because 2011, when it acquired 3 US firms to establish a presence in Nevada.

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

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

Mr Asher said William Hill has ended up being a household name in Nevada but that's not always the goal everywhere.

"We certainly intend to have an extremely considerable brand existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our local partner is."

"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to take place on the first day."

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