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UK betting firms gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business press reporter, New york city
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It's high stakes for UK firms as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on betting entered effect in Delaware, a small 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 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.

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

For UK companies, which are coming to grips with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly suitable.

Why the sports betting industry faces an uncertain future

How does prohibited sports betting wagering work and what are the worries?

But the industry states depending on the US stays a risky bet, as UK business deal with complicated state-by-state policy and competitors from entrenched local interests.

"It's something that we're actually concentrating on, however equally we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external released in January.
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Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.

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

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

Potential earnings ranges from $4.2 bn to almost $20bn each year depending on aspects like how many states move to legalise, Oxford Economics estimated in a 2017 research 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 believe the majority of people ... are looking 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, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual earnings.

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

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

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

States have actually also been sluggish to legalise many kinds of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is normally viewed in its own category, "it plainly 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 apprehended 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 carefully, choosing partners with caution and avoiding errors that might cause regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to collect a percentage of income as an "integrity charge".

International business face the added obstacle 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 turf.

Analysts state UK companies will need to strike partnerships, offering their know-how and technology in order to make inroads.

They point to SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

"It will be a win-win for everybody, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has actually been buying the US market considering 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 supervisor for the Delaware Lottery and has invested millions along with a local designer 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 goal all over.

"We certainly intend to have a really considerable brand presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our regional partner is."

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

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