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UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new rules on betting entered into result in Delaware, a small east coast state about two hours from Washington.

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

The changes are the first in what could become 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 establish 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 coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially appropriate.

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But the industry says relying on the US stays a risky bet, as UK companies deal with complex state-by-state regulation and competitors from interests.

"It's something that we're actually focusing on, however equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Require time'

The US represented 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 hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

The ruling found 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 expected to cause considerable variation in how firms get accredited, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn annually depending upon factors like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research 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 specialists KPMG.

Now, he said: "I think many people ... are taking a look 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in annual revenue.

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

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip up until relatively just recently.

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

States have actually also been sluggish to legalise lots of types of online betting, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

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

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 a consultant, he says UK companies should approach the marketplace thoroughly, picking partners with care and avoiding mistakes that might cause regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is a chance for organization," he says. "It really is dependent on the outcome of [state] legislation and how the service operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to collect a percentage of revenue as an "integrity cost".

International companies deal with the included obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their grass.

Analysts say UK firms will need to strike partnerships, offering their know-how and technology in order to make inroads.

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

"It will be a win-win for everyone, 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 been buying the US market because 2011, when it acquired three US firms to develop a presence in Nevada.

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

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

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

"We certainly intend to have an extremely considerable brand existence in New Jersey," he stated. "In other states, it will just depend upon policy and possibly who our local partner is."

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

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