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

5 June 2018

By Natalie Sherman
bit.ly
Business press reporter, New York

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

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

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

The changes are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

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

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But the market states counting on the US stays a dangerous bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.

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

'Take some time'

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

Firms are wanting to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of 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 wagering, leaving that question to local legislators.
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That is expected to cause considerable variation in how firms get certified, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn annually depending upon aspects 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think the majority of people ... are looking 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 some time'."

'Remains to be seen"

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

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

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have actually also been slow to legalise many types of online gaming, regardless of a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting is generally seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a consultant, he says UK companies must approach the marketplace carefully, selecting partners with caution and avoiding errors that could cause regulator reaction.

"This is an opportunity for the wagerer ... I'm unsure whether it is a chance for company," he says. "It truly depends on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be collaborations'

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

International business face the added difficulty of an effective existing gaming market, with casino operators, state-run lottos and Native American people that are seeking to protect their grass.

Analysts say UK companies will require to strike partnerships, offering their proficiency and technology in order to make inroads.

They indicate SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals 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 stated.

'It will simply depend'

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

The business has been buying the US market considering that 2011, when it bought three US firms to develop an existence in Nevada.

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

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a regional designer 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 necessarily the objective everywhere.

"We certainly intend to have an extremely substantial brand name existence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially who our regional 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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