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UK sports betting companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

The changes 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 market sees a "when in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing consolidation, competition and harder guidelines from UK regulators, the timing is especially suitable.

Why the gambling market faces an uncertain future

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

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

"It's something that we're truly focusing on, but similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.

'Require time'

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

Firms are wishing to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.
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The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to regional lawmakers.

That is expected to lead to considerable variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the market.

Potential income varieties from $4.2 bn to almost $20bn annually depending upon aspects like the number of states transfer to legalise, Oxford Economics approximated in a 2017 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 consultants KPMG.

Now, he stated: "I believe many people ... are looking at this as, 'it's a chance however 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual profits.

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a regular sight.

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip till reasonably just recently.

In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.
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States have likewise been slow to legalise numerous forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting wagering is normally viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he states UK companies need to approach the market thoroughly, choosing partners with caution and preventing errors that might cause regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is an opportunity for organization," he states. "It really is dependent 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 fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".

International companies face the included challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their turf.
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Analysts say UK firms will need to strike collaborations, offering their competence and innovation in order to make inroads.

They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

"It will be a win-win for everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The company has actually been buying the US market considering that 2011, when it acquired three US companies to establish a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually ended up being a home name in Nevada but that's not always the objective all over.

"We definitely plan to have an extremely significant brand presence in New Jersey," he said. "In other states, it will simply depend on policy and potentially who our regional partner is."

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

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