UK wagering firms gamble on US after sports betting wager ruling

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.

From Tuesday, new guidelines on wagering came into result in Delaware, a small east coast state about two hours from Washington.

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

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

The market sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry states counting on the US remains a risky bet, as UK companies deal with complicated state-by-state guideline and competition from entrenched local interests.

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

'Take some time'
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The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming profits last year, according to a report by Technavio, external published in January.

Firms are wanting to use more of that activity after last month's choice, which overruled 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 in fact legalise sports betting wagering, leaving that question to local lawmakers.

That is expected to lead to considerable variation in how firms get accredited, where sports betting can happen, and which occasions are open to with big ramifications for the size of the market.

Potential profits varieties from $4.2 bn to almost $20bn every year depending on factors like how many 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'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many individuals ... are taking a look at this as, 'it's an opportunity but it's not going to be $20bn and it's going to be state by state and it's going to take some time'."

'Remains to be seen"
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Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in yearly income.

But bookies face a far different landscape in America than they perform in the UK, where betting shops are a regular sight.

US laws restricted betting mostly 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 likewise been sluggish to legalise many forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
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While sports betting wagering is normally seen in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now an expert, he states UK companies should approach the market thoroughly, picking partners with caution and avoiding errors that could result in regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of income as an "integrity cost".

International companies deal with the added difficulty of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their grass.

Analysts state UK companies will require to strike partnerships, using their proficiency and innovation in order to make inroads.

They point to SBTech's current statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

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

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the truths.

The business has been buying the US market considering that 2011, when it bought three US companies to establish a presence in Nevada.

William Hill now uses about 450 people in the US and has revealed partnerships with casinos 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 said William Hill has actually become a home name in Nevada however that's not necessarily the goal all over.

"We certainly plan to have a really substantial brand name presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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