UK wagering companies gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

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

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

The changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

For UK firms, which are coming to grips with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

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But the industry says relying on the US stays a risky bet, as UK business face complicated state-by-state policy and competitors from entrenched regional interests.
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"It's something that we're really focusing on, but equally we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take time'

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

Firms are wishing to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of 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 legalise sports betting, leaving that concern to regional lawmakers.

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

Potential profits varieties from $4.2 bn to almost $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics approximated in a 2017 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 said: "I think a lot of individuals ... are looking 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 time'."

'Remains to be seen"

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

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

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.
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In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.

States have actually also been sluggish to legalise numerous forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is typically seen in its own category, "it clearly remains 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 policy.

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

Now a specialist, he says UK companies must approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that might result in regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of profits as an "integrity cost".

International companies deal with the included obstacle of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their grass.

Analysts say UK companies will require to strike partnerships, providing their proficiency 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 kind of deals likely to materialise.

"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has actually been investing in the US market because 2011, when it purchased 3 US companies to develop a presence in Nevada.

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

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

Mr Asher said William Hill has ended up being a home name in Nevada but that's not always the goal all over.

"We definitely mean to have a really significant brand name presence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our local partner is."

"The US is going to be the greatest sports betting wagering market in the world," he added. "Obviously that's not going to happen on day one."
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