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UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, brand-new guidelines on wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The industry sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with combination, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

Why the gaming market faces an unsure future

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

But the market says counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competitors from established regional interests.

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

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external released in January.
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Firms are intending to use more of that activity after last month's decision, which struck down a 1992 federal law that states outside of Nevada and a couple of others from authorising sports betting.

The judgment 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 local lawmakers.

That is expected to lead to considerable variation in how companies get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to nearly $20bn annually depending on elements like the number of 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 substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think the majority of 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 take time'."

'Remains to be seen"

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

But bookies deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
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US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.

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

States have actually also been sluggish to legalise many kinds of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is usually viewed in its own category, "it clearly remains to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
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David Carruthers is the previous chief executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies need to approach the marketplace carefully, picking partners with care and preventing missteps that might cause regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of profits as an "stability cost".

International companies face the added difficulty of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts state UK companies will require to strike partnerships, using their knowledge and innovation in order to make inroads.

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

"It will be a win-win for everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has been investing in the US market given that 2011, when it bought 3 US companies to establish a presence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.
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It works as threat supervisor for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada but that's not always the goal all over.
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"We certainly plan to have a really substantial brand existence in New Jersey," he stated. "In other states, it will just depend upon policy and possibly who our local partner is."
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"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to occur on day one."

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