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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.
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Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

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

The industry sees a "once in a generation" opportunity to develop a in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.
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But the market says depending on the US remains a risky bet, as UK business face complex state-by-state policy and competitors from established local interests.

"It's something that we're actually focusing on, however equally we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Take time'

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

Firms are wanting to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

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

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

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

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

Now, he stated: "I believe many people ... are looking at this as, 'it's a chance 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 in some type by 2023, developing a market with about $6bn in yearly earnings.

But bookmakers deal with a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.

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

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

States have likewise been slow to legalise lots of types of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is normally seen in its own classification, "it plainly stays to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a consultant, he states UK companies should approach the market thoroughly, choosing partners with care and preventing errors that could result in regulator reaction.

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

'It will be collaborations'
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As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a portion of profits as an "stability fee".
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International business deal with the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

Analysts say UK companies will require to strike collaborations, providing their competence and innovation in order to make inroads.

They point to SBTech's recent statement that it is providing innovation 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 collaborations 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 company has actually been buying the US market considering that 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 collaborations 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 developer in a New Jersey horse racing track.

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

"We definitely intend to have an extremely significant brand existence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our regional partner is."

"The US is going to be the most significant sports betting wagering market in the world," he added. "Obviously that's not going to happen on day one."

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