UK betting companies gamble on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business reporter, New york city

It's high stakes for UK companies as sports betting wagering starts to spread out in America.
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From Tuesday, new rules on sports betting came into effect in Delaware, a tiny 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 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 industry sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.

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

"It's something that we're truly 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 revenue last year, according to a report by Technavio, external released in January.
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Firms are intending to tap into 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 in fact legalise sports betting, leaving that concern to regional lawmakers.

That is expected to lead to significant variation in how companies get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue ranges from $4.2 bn to nearly $20bn each year depending upon factors like how lots of states relocate to legalise, Oxford Economics approximated 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 consultants KPMG.

Now, he said: "I think many 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 time'."

'Remains to be seen"

Chris Grove, managing 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 yearly income.

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

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

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

States have actually likewise been slow to legalise numerous types of online sports betting, regardless of a 2011 Justice Department opinion that appeared to remove challenges.

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

David Carruthers is the previous president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he states UK companies ought to approach the market thoroughly, choosing partners with care and avoiding missteps that could result in regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is a chance for service," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of income as an "stability charge".

International companies deal with the included difficulty of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts say UK companies will need to strike collaborations, providing their know-how and technology in order to make inroads.

They indicate SBTech's current announcement that it is providing 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 partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The business has been buying the US market given that 2011, when it acquired 3 US firms to develop an existence in Nevada.
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William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher said William Hill has become a household name in Nevada however that's not always the goal everywhere.

"We definitely plan to have a very considerable brand name presence in New Jersey," he said. "In other states, it will just depend on policy and possibly 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 happen on day one."

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