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UK wagering firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city
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It's high stakes for UK firms as sports betting starts to spread in America.

From Tuesday, brand-new guidelines on wagering came into effect in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey could 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 way for states to allow sports betting.

The industry sees a "when in a generation" chance to develop 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 competitors and harder rules from UK regulators, the timing is especially opportune.

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

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

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income last year, according to a report by Technavio, external published in January.
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Firms are intending to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few 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, leaving that concern to regional lawmakers.
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That is anticipated to lead to considerable variation in how companies get certified, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states transfer 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 substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to require time'."
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'Remains to be seen"

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

But bookmakers face a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until reasonably just 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 numerous forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting is usually seen in its own category, "it clearly stays to be seen whether it gets the sort of momentum individuals believe 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 previous chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he says UK firms should approach the marketplace thoroughly, choosing partners with caution and preventing errors that might cause regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is an opportunity for organization," he says. "It actually is reliant on the result of [state] legislation and how the company operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which want to gather a portion of profits as an "integrity cost".

International business deal with the included obstacle of an effective existing gaming market, with casino operators, state-run lotteries and Native American people that are looking for to safeguard their grass.

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

They indicate SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.
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"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the truths.
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The company has actually been investing in the US market since 2011, when it bought three US firms to establish a presence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.

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

"We definitely mean to have a really significant brand name presence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our local partner is."

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

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