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UK wagering companies 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 guidelines on sports betting entered into effect 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 end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

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

For UK companies, which are grappling with combination, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

Why the gambling market faces an unpredictable future

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

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

"It's something that we're really focusing 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 some 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 wanting to take advantage of 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.

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local legislators.

That is expected to lead to substantial variation in how companies get accredited, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $20bn annually depending upon factors like how many states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he said: "I believe the majority of individuals ... 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, anticipates that 32 states will legalise sports betting 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 sports betting shops are a frequent sight.

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

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

States have actually likewise been slow to legalise many types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now a specialist, he says UK companies need to approach the marketplace thoroughly, selecting partners with caution and preventing bad moves that could result in regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to collect a portion of profits as an "stability cost".

International companies deal with the added challenge of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their turf.

Analysts state UK firms will need to strike collaborations, using their know-how and technology in order to make inroads.

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

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

'It will just depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.
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The company has actually been investing in the US market because 2011, when it bought 3 US companies to develop an existence in Nevada.

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

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

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not always the objective all over.

"We definitely intend to have a very considerable brand presence in New Jersey," he said. "In other states, it will just depend on guideline and potentially who our local partner is."

"The US is going to be the biggest sports betting wagering market in the world," he included. "Obviously that's not going to happen on the first day."
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