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

Business press reporter, New York

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

From Tuesday, new guidelines on betting came into result in Delaware, a small east coast state about two hours from Washington.

New Jersey could 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 way for states to permit sports betting.

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

For UK companies, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly suitable.

Why the sports betting market faces an unpredictable future

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But the market says counting on the US remains a risky bet, as UK business face complex state-by-state regulation and competition from entrenched regional interests.
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"It's something that we're really concentrating on, but similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are hoping 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 ruling discovered 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 lawmakers.

That is expected to result in considerable variation in how firms get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to nearly $20bn annually depending on aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe many individuals ... 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 time'."

'Remains to be seen"

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

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

US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.

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

States have actually also been slow to legalise numerous forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting wagering is generally seen in its own category, "it plainly remains to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

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

Now a specialist, he says UK companies must approach the marketplace carefully, choosing partners with caution and avoiding bad moves that might result in regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for company," he says. "It truly is dependent on the result of [state] legislation and how the organization operators pursue the opportunity."

'It will be partnerships'

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 percentage of profits as an "integrity charge".

International companies face the added challenge of a powerful existing gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their grass.

Analysts say UK companies will require to strike collaborations, using their knowledge and technology in order to make inroads.

They point to SBTech's recent statement that it is supplying 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 everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The company has been purchasing the US market since 2011, when it bought 3 US companies to develop a presence in Nevada.

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

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

Mr Asher stated William Hill has actually become a household name in Nevada but that's not always the objective everywhere.

"We definitely mean to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our regional partner is."

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

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