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UK sports betting companies bet on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

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

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

The market sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

Why the sports betting market faces an unsure future

How does wagering work and what are the worries?
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But the market says depending on the US stays a risky bet, as UK business deal with complicated state-by-state policy and competitors from entrenched local interests.

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

'Require time'

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

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

The judgment 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 regional legislators.

That is anticipated to lead to significant variation in how companies get licensed, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the market.

Potential profits varieties from $4.2 bn to almost $20bn annually depending on factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual earnings.

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

US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip up until relatively recently.

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

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

While sports betting is typically viewed in its own category, "it plainly stays 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 president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK companies should approach the marketplace carefully, choosing partners with caution and preventing errors that could result in regulator reaction.

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

'It will be collaborations'

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

International companies face the added difficulty of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to defend their grass.

Analysts state UK companies will need to strike partnerships, using their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type 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, primary executive at William Hill US, is clear-eyed about the realities.

The business has been purchasing the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.
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William Hill now utilizes about 450 people in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We definitely plan to have a very substantial brand existence in New Jersey," he said. "In other states, it will just depend on guideline and possibly 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 the first day."

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