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

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

The market sees a "as soon as 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 firms, which are coming to grips with consolidation, increased online competition and harder rules from UK regulators, the timing is particularly opportune.

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But the market states counting on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competition from established regional interests.

"It's something that we're truly concentrating on, but equally 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.

'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 published in January.

Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond 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 sports betting, leaving that concern to local lawmakers.

That is anticipated to lead to substantial variation in how companies get accredited, where sports betting can occur, and which events are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on aspects like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... 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 some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in yearly income.

But bookmakers face a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.

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

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

States have also been sluggish to legalise numerous 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 category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

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

Now an expert, he states UK firms must approach the market carefully, selecting partners with care and preventing bad moves that might lead to regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a portion of profits as an "stability charge".

International companies deal with the included obstacle of an effective existing gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts say UK companies will require to strike partnerships, using their proficiency 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 sort of offers most 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 said.

'It will simply depend'

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

The business has been investing in the US market given that 2011, when it acquired three US companies to develop a presence in Nevada.

William Hill now utilizes about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a home name in Nevada but that's not always the goal everywhere.

"We certainly intend to have a very significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on guideline and possibly who our local partner is."

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

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