UK wagering companies gamble on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on wagering entered into effect 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

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

For UK companies, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is especially suitable.

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But the market states counting on the US stays a dangerous bet, as UK business face complex state-by-state regulation and competition from entrenched regional interests.

"It's something that we're actually concentrating on, but equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Require time'

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

Firms are hoping to use more of that activity after last decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few 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, leaving that concern to regional lawmakers.

That is expected to lead to significant variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with big implications for the size of the market.

Potential revenue varieties from $4.2 bn to almost $20bn every year depending on factors like how numerous states transfer 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe the majority of individuals ... are looking 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual earnings.

But bookmakers face a far different landscape in America than they perform in the UK, where wagering shops are a frequent sight.

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have also been slow to legalise lots of forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting wagering is normally viewed in its own classification, "it clearly stays to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the previous chief executive of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he states UK firms should approach the market thoroughly, picking partners with care and avoiding errors that could cause regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for business," he says. "It truly depends on the outcome of [state] legislation and how business operators pursue the opportunity."
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'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of revenue as an "stability charge".

International companies face the added difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts state UK firms will require to strike collaborations, using their knowledge and innovation in order to make inroads.

They indicate SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," 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 considering that 2011, when it acquired three US firms to develop a presence in Nevada.
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William Hill now employs about 450 individuals in the US and has announced partnerships with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not always the goal all over.

"We definitely mean to have a very significant brand name presence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our local partner is."

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

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