UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman
bet9ja.com
Business reporter, New York
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It's high stakes for UK companies as sports betting starts to spread in America.

From Tuesday, brand-new guidelines on sports betting entered into result in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

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

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

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But the industry says relying on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competition from entrenched regional interests.

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

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external published in January.
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Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

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

That is anticipated to result in significant variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big ramifications for the size of the market.

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

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

Now, he said: "I think many people ... are looking 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 some time'."

'Remains to be seen"

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

But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

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

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

States have actually likewise been sluggish to legalise many forms of online betting, in spite of a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting is usually seen in its own category, "it clearly stays to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

David Carruthers is the former primary executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he says UK firms must approach the marketplace thoroughly, choosing partners with caution and avoiding mistakes that might cause regulator reaction.

"This is a chance for the American sports betting ... I'm not exactly sure whether it is a chance for business," he says. "It truly depends on the result of [state] legislation and how the organization operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".

International business deal with the added challenge of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to safeguard their grass.

Analysts say UK firms will need to strike partnerships, using their competence and technology in order to make inroads.

They indicate SBTech's recent 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, however it will be partnerships 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 realities.

The business has been investing in the US market given that 2011, when it purchased three US companies to establish an existence in Nevada.

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

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

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

"We certainly intend to have a very considerable brand existence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our regional partner is."

"The US is going to be the greatest sports betting market worldwide," he added. "Obviously that's not going to occur on the first day."

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