UK sports betting companies gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on wagering entered into result in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring 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 the way for states to permit sports betting wagering.

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

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

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But the market says counting on the US stays a dangerous bet, as UK business deal with complicated state-by-state regulation and competition from established local interests.

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

'Require time'

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

Firms are intending to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

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

That is anticipated to lead to significant variation in how firms get accredited, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential income ranges from $4.2 bn to practically $20bn yearly depending on factors like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think 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 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 income.

But bookies face a far different landscape in America than they carry out in the UK, where sports betting shops are a regular sight.

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

States have actually likewise been slow to legalise lots of types of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now a consultant, he states UK firms must approach the marketplace carefully, selecting partners with caution and avoiding missteps that might cause regulator reaction.
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"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for company," he states. "It really depends on the outcome of [state] legislation and how the service operators pursue the opportunity."

'It will be collaborations'

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

International companies deal with the added challenge of an effective existing video gaming market, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.
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Analysts say UK firms will need to strike collaborations, offering their know-how and innovation in order to make inroads.

They indicate SBTech's current announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

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

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.

The company has been buying the US market since 2011, when it acquired 3 US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

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

"We definitely plan to have an extremely considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on policy and potentially who our regional partner is."
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"The US is going to be the biggest sports betting wagering market on the planet," he included. "Obviously that's not going to occur on day one."
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