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

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new rules on wagering entered result in Delaware, a tiny east coast state about 2 hours from Washington.

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

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

The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are grappling with consolidation, competitors and tougher guidelines from UK regulators, the timing is especially appropriate.

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But the market says counting on the US stays a risky bet, as UK companies face complicated state-by-state regulation and competitors from entrenched local interests.

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

'Require time'

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

Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.
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The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to local legislators.

That is anticipated to result in substantial variation in how firms get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn yearly depending on elements like the number of states transfer 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 huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe the majority of people ... are looking at this as, 'it's an opportunity 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in yearly earnings.

But bookies deal with a far different landscape in America than they do in the UK, where betting shops are a frequent sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to remove challenges.

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

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

Now a consultant, he says UK companies ought to approach the marketplace carefully, selecting partners with care and avoiding missteps that might result in regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of profits as an "stability charge".

International business deal with the added obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their grass.

Analysts say UK companies will need to strike collaborations, offering their know-how and innovation in order to make inroads.

They point to SBTech's current announcement that it is providing 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 everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
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'It will just depend'

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

The company has been purchasing the US market because 2011, when it acquired 3 US firms to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has actually become a household name in Nevada but that's not necessarily the objective all over.

"We certainly mean to have an extremely substantial brand existence in New Jersey," he said. "In other states, it will just depend upon guideline and possibly who our local partner is."

"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to take place on day one."

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