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UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

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

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

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

For UK firms, which are facing consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly appropriate.

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But the market states counting on the US stays a risky bet, as UK business deal with complex state-by-state guideline and competition from entrenched local interests.

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

'Take some time'

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

Firms are intending to use more of that after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that question to local lawmakers.

That is anticipated to result in significant variation in how companies get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn annually depending upon elements like the number of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe many 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 require time'."

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly just recently.
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In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have actually likewise been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is usually viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people think it will," stated 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 offshore online sportsbook and served prison time.

Now an expert, he states UK firms must approach the marketplace carefully, choosing partners with care and preventing mistakes that could result in regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is a chance for organization," he says. "It truly is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

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

International business deal with the added challenge of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to defend their turf.

Analysts say UK companies will require to strike collaborations, using their knowledge and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

"It will be a win-win for everyone, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has been purchasing the US market given that 2011, when it acquired three US firms to develop a presence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.
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Mr Asher stated William Hill has ended up being a family name in Nevada however that's not always the objective all over.
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"We certainly intend to have an extremely substantial 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 greatest sports betting wagering market on the planet," he added. "Obviously that's not going to take place on day one."
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