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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

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

From Tuesday, brand-new guidelines on sports betting came into result in Delaware, a tiny east coast state about 2 hours from Washington.
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Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

The modifications 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 permit sports betting.

The market sees a "once in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who research at Davy.

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

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But the market states depending on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competitors from established regional interests.

"It's something that we're truly concentrating on, but similarly we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Require time'

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

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

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

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

Potential earnings ranges from $4.2 bn to nearly $20bn yearly depending upon elements like how many 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think 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 in some type by 2023, creating a market with about $6bn in annual income.

But bookmakers deal with a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws limited sports betting largely to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have also been sluggish to legalise many types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting is typically viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the previous primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
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Now a specialist, he states UK firms should approach the market carefully, picking partners with care and avoiding errors that could cause regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a portion of earnings as an "integrity fee".

International business deal with the added difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to safeguard their turf.
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Analysts state UK companies will require to strike collaborations, providing their knowledge and innovation in order to make inroads.

They indicate SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type 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 technology," Mr Hawkley said.

'It will simply depend'

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

The company has actually been buying the US market considering that 2011, when it acquired three US companies to develop a presence in Nevada.

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

It works as risk manager for the Delaware Lottery and has actually invested millions along with a regional developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a family name in Nevada but that's not always the objective all over.

"We certainly plan to have a really significant brand presence in New Jersey," he stated. "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 market on the planet," he added. "Obviously that's not going to take place on day one."

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