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

5 June 2018

By Natalie Sherman
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Business press reporter, New york city

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

From Tuesday, new guidelines on sports betting came into impact 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 end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.
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The industry sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly suitable.

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But the market states relying on the US remains a dangerous bet, as UK companies deal with complicated state-by-state guideline and competitors from entrenched regional interests.

"It's something that we're actually concentrating on, but equally we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Take some time'

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

Firms are wishing to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local lawmakers.

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

Potential income varieties from $4.2 bn to nearly $20bn yearly depending on aspects like how lots of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

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

'Remains to be seen"

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

But bookmakers face a far various landscape in America than they carry out in the UK, where wagering stores are a frequent sight.

US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have actually also been sluggish to legalise lots of forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting is typically seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

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

Now a consultant, he states UK firms should approach the market thoroughly, picking partners with care and avoiding bad moves that could cause regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to collect a portion of earnings as an "integrity fee".

International companies deal with the included difficulty of an effective existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to protect their turf.

Analysts state UK firms will need to strike collaborations, offering their expertise and technology in order to make inroads.
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They point to SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind 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 technology," Mr Hawkley stated.

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.

The company has been investing in the US market because 2011, when it acquired 3 US companies to develop an existence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually become a household name in Nevada however that's not always the objective everywhere.

"We certainly intend to have a very significant brand name existence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our regional partner is."

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

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