UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Sherman

Business press reporter, New York

It's high stakes for UK firms as sports betting wagering starts to spread in America.
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From Tuesday, brand-new rules on betting came into 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 changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

For UK firms, which are grappling with debt consolidation, increased online competitors and tougher 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 companies deal with complicated state-by-state policy and competition from established regional interests.

"It's something that we're really concentrating on, but equally we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.
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'Take some time'

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

Firms are hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to regional lawmakers.
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That is expected to result in considerable variation in how firms get accredited, where sports betting wagering can take place, and which occasions are open to speculation - with huge implications for the size of the market.

Potential revenue ranges from $4.2 bn to nearly $20bn annually depending upon aspects like how many states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think the majority of people ... are taking a look at this as, 'it's an opportunity however 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some form by 2023, producing a market with about $6bn in yearly income.

But bookmakers face a far different landscape in America than they do in the UK, where sports betting stores are a regular sight.

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have actually also been slow to legalise many kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting wagering is typically viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
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David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he says UK companies must approach the market thoroughly, choosing partners with caution and avoiding errors that could result in regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to gather a portion of income as an "stability cost".

International companies deal with the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to safeguard their grass.

Analysts say UK firms will need to strike collaborations, providing their competence and technology in order to make inroads.
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They indicate SBTech's current statement that it is supplying 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 innovation," Mr Hawkley said.

'It will just depend'

Joe Asher, primary executive 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 acquired 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.

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

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

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

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

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