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UK sports betting companies gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on wagering entered into impact 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 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.

The market sees a “when in a generation” opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who research at Davy.
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For UK companies, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially appropriate.

Why the gambling industry faces an unsure future

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

But the market states relying on the US stays a dangerous bet, as UK companies deal with complicated state-by-state guideline and competition from entrenched regional interests.

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

'Require time'

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

Firms are wishing to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

The judgment discovered 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 expected to result in considerable variation in how companies get certified, where sports betting can happen, and which occasions are open to speculation - with huge implications for the size of the market.
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Potential income ranges from $4.2 bn to almost $20bn annually depending upon elements like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 research 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 experts KPMG.

Now, he said: “I believe the majority of individuals ... 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 some time’.“

'Remains to be seen"

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

But bookies face a far various landscape in America than they do in the UK, where wagering shops are a frequent sight.

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have actually also been slow to legalise many forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting wagering is normally viewed in its own classification, “it clearly remains to be seen whether it gets the type of momentum people believe it will,” said 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 former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he states UK firms should approach the marketplace carefully, picking partners with care and preventing mistakes that might cause regulator reaction.
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"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for service,” he states. “It truly depends on the result of [state] legislation and how business operators pursue the chance.“

'It will be partnerships'
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As legalisation begins, sports betting companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of earnings as an “integrity cost”.

International companies deal with the added obstacle of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their turf.

Analysts state UK firms will need to strike partnerships, using their competence and innovation in order to make inroads.

They indicate SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

"It will be a win-win for everybody, however 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 company has actually been purchasing the US market because 2011, when it bought three US companies to develop a presence in Nevada.
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William Hill now uses about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has become a household name in Nevada however that's not necessarily the goal all over.

"We certainly plan to have a very substantial brand name existence in New Jersey,” he stated. “In other states, it will simply depend upon regulation and potentially who our regional partner is.“

"The US is going to be the greatest sports betting wagering market worldwide,” he included. “Obviously that's not going to take place on the first day.“

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