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UK betting firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, brand-new guidelines on betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.

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

The modifications are the very first in what might end up being 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 develop 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 coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is especially opportune.

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But the industry says relying on the US stays a risky bet, as UK business face complex state-by-state regulation and competitors from established regional interests.

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

'Take time'

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

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

The ruling discovered the law was an over-reach of . But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is expected to result in considerable variation in how firms get certified, where sports betting 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 practically $20bn every year depending upon aspects like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe 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 time'."

'Remains to be seen"
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Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly earnings.

But bookies deal with a far various landscape in America than they perform in the UK, where sports betting stores are a regular sight.

US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have also been sluggish to legalise lots of forms of online gambling, despite a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is usually seen in its own category, "it clearly 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 policy.

David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK firms need to approach the market thoroughly, selecting partners with caution and avoiding bad moves that might result in regulator reaction.
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"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for business," he states. "It really is dependent on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of revenue as an "stability charge".

International business deal with the added difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to defend their grass.
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Analysts state UK companies will require to strike partnerships, offering their knowledge and innovation in order to make inroads.

They indicate 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 everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has been buying the US market since 2011, when it acquired 3 US firms to establish an existence in Nevada.

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

It works as danger supervisor 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.

"We definitely intend to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and potentially who our regional partner is."

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

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