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

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new rules on wagering entered effect in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

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

For UK companies, which are grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.

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But the market states relying on the US stays a risky bet, as UK business face complex state-by-state regulation and competition from established local interests.

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

'Take time'

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

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

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

That is expected to cause considerable variation in how companies get accredited, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the market.

Potential earnings ranges from $4.2 bn to almost $20bn annually depending on aspects like how many states transfer 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 take time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in annual income.

But bookies face a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

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

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

States have actually likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

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

Now an expert, he says UK companies should approach the market carefully, choosing partners with caution and preventing errors that could lead to regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which want to gather a portion of income as an "integrity fee".

International business deal with the included difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their grass.

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

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

'It will just depend'

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

The business has been purchasing the US market given that 2011, when it bought three US firms to develop an existence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions alongside a regional developer 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 necessarily the goal all over.

"We definitely mean to have a really substantial brand name existence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our regional partner is."

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

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