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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

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

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

Neighbouring New Jersey could 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 method for states to permit sports betting wagering.

The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.

Why the gambling market deals with an uncertain future

How does prohibited sports betting wagering work and what are the fears?

But the market says relying on the US stays a dangerous bet, as UK business deal with complex state-by-state regulation and competition from entrenched regional interests.

"It's something that we're actually focusing on, however equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
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'Take some time'

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

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

The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is expected to lead to considerable variation in how companies get accredited, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.

Potential earnings ranges from $4.2 bn to almost $20bn each year depending on aspects like how lots of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity however 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual profits.

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
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US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have likewise been sluggish to legalise lots of forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting wagering is typically seen in its own classification, "it plainly remains to be seen whether it gets the type of momentum individuals think 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 president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a specialist, he says UK companies need to approach the market carefully, selecting partners with care and avoiding errors that could lead to regulator reaction.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is an opportunity for company," he says. "It actually is reliant on the result of [state] legislation and how business operators pursue the chance."
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'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of income as an "stability cost".

International companies deal with the added challenge of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their grass.

Analysts state UK companies will need to strike collaborations, using their competence and innovation in order to make inroads.

They point to SBTech's current announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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 stated.

'It will simply depend'

Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.
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The business has actually been buying the US market considering that 2011, when it purchased 3 US firms to develop a presence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has become a family name in Nevada but that's not necessarily the goal everywhere.

"We definitely mean to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."

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

More on this story

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