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UK sports betting companies gamble 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 out in America.
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From Tuesday, new guidelines on sports betting entered into impact in Delaware, a small east coast state about two hours from Washington.

New Jersey could 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 wagering.

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

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

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But the industry says depending on the US stays a risky bet, as UK companies deal with complex state-by-state guideline and competitors from established regional interests.

"It's something that we're really focusing on, but equally we don't wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings in 2015, according to a report by Technavio, external published in January.

Firms are intending 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 few 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 question to local legislators.

That is expected to result in significant variation in how companies get licensed, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the market.
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Potential income ranges from $4.2 bn to almost $20bn each year depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe many individuals ... are looking 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"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in annual profits.

But bookies deal with a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have actually likewise been slow to legalise lots of forms of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is generally viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe 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 previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he states UK companies must approach the market carefully, choosing partners with care and preventing mistakes that might result in regulator backlash.

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

'It will be collaborations'

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

International companies face the included challenge of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.

Analysts state UK companies will require to strike collaborations, offering their knowledge and technology in order to make inroads.

They point to SBTech's recent announcement that it is offering 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, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The company has been buying the US market given that 2011, when it acquired three US companies to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a family name in Nevada but that's not always the goal everywhere.

"We definitely mean to have an extremely significant 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 most significant sports betting wagering market worldwide," he included. "Obviously that's not going to happen on day one."

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