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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new rules on wagering entered into impact in Delaware, a tiny 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 permit sports betting wagering.

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

For UK companies, which are facing consolidation, increased online competitors and from UK regulators, the timing is especially opportune.

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

"It's something that we're truly focusing on, however similarly we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take time'

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

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

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

That is expected to lead to substantial variation in how firms get certified, where sports betting wagering can take place, and which occasions are open to speculation - with huge implications for the size of the marketplace.
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Potential income varieties from $4.2 bn to practically $20bn each year depending on factors like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think the majority of people ... 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 bookies deal with a far various landscape in America than they carry out in the UK, where wagering stores are a regular sight.

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably 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 numerous forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to get rid of barriers.
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While sports betting is generally viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.
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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 jail time.

Now a consultant, he says UK companies should approach the marketplace thoroughly, choosing partners with caution and avoiding mistakes that could cause regulator reaction.

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

'It will be collaborations'

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

International business face the included challenge of an effective existing gaming market, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.

Analysts say UK firms will need to strike collaborations, using their knowledge and technology in order to make inroads.

They indicate SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers 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 just depend'

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

The company has been buying the US market because 2011, when it acquired three US firms to establish a presence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has invested millions along with a local developer in a New Jersey horse racing track.

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

"We certainly plan to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."

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

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