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UK wagering companies gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The industry sees a "once in a generation" opportunity to develop a in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.

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

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

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income 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 choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

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 legislators.

That is expected to result in substantial variation in how companies get certified, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn every 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 great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe many 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 take time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly revenue.

But bookies face a far different landscape in America than they do 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 till relatively recently.

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

States have also been slow to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting is usually viewed in its own classification, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

David Carruthers is the previous primary executive 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 ought to approach the market carefully, choosing partners with care and avoiding bad moves that could lead to regulator backlash.

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

'It will be collaborations'

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

International business face the included obstacle of a powerful 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 firms will require to strike partnerships, using their competence and technology in order to make inroads.

They point to SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.

"It will be a win-win for everyone, but it will be collaborations 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 realities.

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

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

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

Mr Asher said William Hill has actually become a family name in Nevada however that's not necessarily the goal everywhere.

"We definitely mean to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our regional partner is."

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

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