UK betting firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on sports betting entered effect in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin 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 way for states to enable sports betting.

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

For UK companies, which are facing combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the market states relying on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competition from entrenched regional interests.

"It's something that we're truly focusing on, but similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are wanting to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.

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

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

Potential earnings varieties from $4.2 bn to almost $20bn yearly depending on aspects like the number of states transfer to legalise, estimated in a 2017 study for the American Gaming Association.

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

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual earnings.
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But bookies deal with a far different landscape in America than they carry out in the UK, where betting stores are a frequent sight.
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US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip up until fairly just recently.
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In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.

States have likewise been sluggish to legalise numerous kinds of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove barriers.

While sports betting wagering is usually viewed in its own category, "it plainly remains to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.

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

Now an expert, he states UK firms need to approach the market carefully, selecting partners with caution and avoiding errors that could cause regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is an opportunity for company," he states. "It actually depends on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'
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As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a portion of profits as an "stability charge".

International business deal with the added obstacle of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their grass.

Analysts state UK companies will require to strike collaborations, providing their expertise and technology in order to make inroads.

They point to SBTech's recent announcement that it is providing 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 partnerships and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The business has actually been investing in the US market since 2011, when it bought 3 US firms to establish a presence in Nevada.

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

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

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

"We certainly plan to have a really significant brand existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our local partner is."

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

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