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

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new rules on betting came into impact 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 modifications are the very 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 "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

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

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But the industry states counting on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competitors from established regional interests.

"It's something that we're truly focusing on, but equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Require 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 published in January.

Firms are hoping to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is expected to lead to considerable variation in how firms get accredited, where sports betting can occur, and which events are open to speculation - with huge for the size of the market.

Potential earnings ranges from $4.2 bn to almost $20bn yearly depending on elements like how numerous states transfer to legalise, Oxford Economics approximated 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 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 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 form by 2023, producing a market with about $6bn in annual earnings.

But bookies deal with a far different landscape in America than they perform in the UK, where wagering shops are a frequent sight.
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US laws restricted betting mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been sluggish to legalise lots of kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is typically seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

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

Now an expert, he states UK companies ought to approach the market thoroughly, picking partners with care and preventing mistakes that might lead to regulator backlash.
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"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for business," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the chance."
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'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a portion of revenue as an "stability fee".
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International companies deal with the added difficulty of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.

Analysts say UK firms will need to strike collaborations, offering their know-how and technology in order to make inroads.
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They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.

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

'It will just depend'

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

The company has actually been purchasing the US market considering that 2011, when it purchased 3 US firms to develop an existence in Nevada.

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

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

Mr Asher said William Hill has actually become a household name in Nevada however that's not always the goal everywhere.

"We definitely plan to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially who our local partner is."

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

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