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

By Natalie Sherman

Business press reporter, New york city

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

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

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

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

The market sees a "once in a generation" opportunity to establish 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 facing consolidation, increased online competition and tougher rules from UK regulators, the timing is especially appropriate.

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But the market states depending on the US stays a dangerous bet, as UK companies face complicated state-by-state guideline and competition from entrenched regional interests.

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

'Take some time'

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

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

The judgment 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 lawmakers.

That is anticipated to result in significant variation in how firms get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to practically $20bn yearly depending upon aspects like how many states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think many people ... are taking a look at this as, 'it's an opportunity but 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly revenue.

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

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip until fairly recently.
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In the popular creativity, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have actually also been sluggish to legalise many kinds of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting is normally viewed in its own classification, "it plainly stays to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.
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David Carruthers is the former primary executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK companies should approach the market carefully, selecting partners with caution and avoiding missteps that might result in regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to gather a percentage of profits as an "integrity charge".

International companies face the included difficulty of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.

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

They point to SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

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

'It will simply depend'

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

The business has been investing in the US market considering that 2011, when it acquired 3 US firms to establish an existence in Nevada.

William Hill now employs about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher said William Hill has actually ended up being a household name in Nevada however that's not necessarily the objective everywhere.

"We certainly intend to have a really substantial brand name existence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our regional partner is."
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"The US is going to be the biggest sports betting market in the world," he added. "Obviously that's not going to take place on day one."

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