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

5 June 2018

By Natalie Sherman

Business 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 came into result in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

The industry sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

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

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But the industry states relying on the US remains a risky bet, as UK companies face complex state-by-state policy and competition from entrenched local interests.

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

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, 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 decision, which overruled a 1992 federal law that barred states outside of 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 in fact legalise sports betting, leaving that concern to regional legislators.

That is anticipated to cause significant variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with big implications for the size of the market.
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Potential income ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like how lots of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming .

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
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Now, he stated: "I think the majority of people ... are looking at this as, 'it's a chance 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 in some kind by 2023, developing a market with about $6bn in annual earnings.

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

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have also been sluggish to legalise lots of types of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting is generally seen in its own classification, "it clearly remains to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
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David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK companies should approach the marketplace thoroughly, choosing partners with care and avoiding mistakes that might result in regulator backlash.
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"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for organization," he states. "It actually depends on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be partnerships'

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

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

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

They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

"It will be a win-win for everyone, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The company has actually been investing in the US market since 2011, when it purchased three US companies to establish an existence in Nevada.

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

It works as threat manager for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually become a home name in Nevada however that's not always the objective everywhere.
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"We definitely plan to have a really substantial brand name presence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our local partner is."

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

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