UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on betting entered into impact in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey might begin 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 method for states to permit sports betting wagering.
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The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.

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But the industry states depending on the US stays a dangerous bet, as UK business face complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

'Take 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 hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.
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The ruling found 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 lawmakers.

That is expected to lead to substantial variation in how companies get certified, where sports betting wagering can take place, and which events are open to speculation - with big for the size of the market.

Potential earnings varieties from $4.2 bn to nearly $20bn each year depending on factors like the number of 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 huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe the majority of people ... are taking a look at this as, 'it's a chance 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual profits.

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

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

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

States have actually also been slow to legalise numerous types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting wagering is usually viewed in its own classification, "it clearly remains to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he states UK firms ought to approach the marketplace carefully, selecting partners with care and preventing mistakes that might result in regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for company," he states. "It truly depends on the outcome of [state] legislation and how the organization operators pursue the chance."
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'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of income as an "integrity cost".

International companies deal with the included obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American people that are seeking to defend their turf.

Analysts state UK firms will need to strike partnerships, offering their know-how and innovation in order to make inroads.

They point to SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.
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"It will be a win-win for everyone, 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 realities.
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The company has actually been purchasing the US market given that 2011, when it bought 3 US companies to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a family name in Nevada however that's not always the objective all over.

"We certainly intend to have an extremely significant brand name presence in New Jersey," he said. "In other states, it will simply depend upon 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 day one."

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