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

5 June 2018

By Natalie Sherman

reporter, New york city

It's high stakes for UK companies as sports betting starts to spread out in America.
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From Tuesday, new rules on wagering came into result in Delaware, a small east coast state about two hours from Washington.

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

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

The market 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 facing consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.

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

"It's something that we're really focusing on, however similarly we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Take time'

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

Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of 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 wagering, leaving that concern to regional lawmakers.

That is anticipated to cause substantial variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn every year depending on aspects like how lots of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe many people ... 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 require time'."

'Remains to be seen"

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

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

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip up until reasonably 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 also been slow to legalise lots of forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is generally seen in its own category, "it plainly stays to be seen whether it gets the sort of momentum individuals believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.

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

Now a consultant, he states UK companies must approach the market carefully, picking partners with caution and avoiding bad moves that might result in regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of revenue as an "integrity charge".
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International companies face the added difficulty of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their grass.

Analysts state UK firms will require to strike partnerships, providing their competence and technology in order to make inroads.

They indicate SBTech's current announcement that it is offering technology 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 everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.
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'It will simply depend'

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

The company has actually been buying the US market since 2011, when it acquired three US firms to develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
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Mr Asher stated William Hill has actually become a home name in Nevada however that's not necessarily the goal all over.

"We definitely mean to have a really considerable brand existence in New Jersey," he stated. "In other states, it will simply depend on policy and possibly who our regional partner is."

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

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