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UK sports betting firms bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on wagering entered impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

For UK companies, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.

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But the market states depending on the US remains a risky bet, as UK business face complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're really concentrating on, but similarly we do not want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.

'Require time'

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

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

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.

That is anticipated to lead to significant variation in how companies get licensed, where sports betting can occur, and which events are open to speculation - with big implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn annually depending upon elements 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 huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many individuals ... are looking at this as, 'it's an opportunity but 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly income.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip up until relatively recently.

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

States have also been sluggish to legalise many forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

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

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

Now a specialist, he states UK firms should approach the market carefully, choosing partners with care and preventing bad moves that might lead to regulator backlash.

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

'It will be collaborations'
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As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of profits as an "integrity fee".

International business face the included obstacle of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to safeguard their grass.

Analysts state UK companies will need to strike collaborations, using their expertise and innovation in order to make inroads.

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

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

'It will just depend'

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

The business has been purchasing the US market because 2011, when it acquired three US companies to develop a presence in Nevada.

William Hill now utilizes about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has actually invested millions together with a regional developer in a New Jersey horse racing track.
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Mr Asher said William Hill has ended up being a family name in Nevada however that's not necessarily the objective all over.

"We definitely intend to have a very significant brand existence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our regional partner is."

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

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