UK sports betting firms gamble on US after sports betting wager ruling
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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.
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From Tuesday, brand-new guidelines on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could start 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 way for states to wagering.
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The industry sees a "once in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly appropriate.

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

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

'Take time'

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

Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

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

That is anticipated to result in considerable variation in how companies get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn each year depending on aspects like how numerous states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I believe the majority of individuals ... are taking a look 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 require time'."

'Remains to be seen"

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

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

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

In the popular imagination, sports betting wagering 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, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

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

Now a specialist, he says UK firms must approach the market carefully, choosing partners with care and preventing errors that might cause regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability fee".

International companies face the added challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their grass.
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Analysts say UK companies will require to strike collaborations, using their know-how and technology in order to make inroads.

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

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

'It will simply depend'

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

The company has actually been purchasing the US market given that 2011, when it acquired three US companies to establish an existence in Nevada.

William Hill now utilizes 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 alongside a regional developer in a New Jersey horse racing track.

Mr Asher said William Hill has ended up being a family name in Nevada but that's not necessarily the objective everywhere.

"We certainly mean to have a really substantial brand presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our regional partner is."

"The US is going to be the greatest sports betting wagering market on the planet," he included. "Obviously that's not going to occur on the first day."

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