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

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 in America.

From Tuesday, new guidelines on sports betting entered effect in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

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

For UK companies, which are grappling with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially suitable.

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But the market says relying on the US remains a risky bet, as UK companies deal with complicated state-by-state guideline and competitors from entrenched local interests.

"It's something that we're actually concentrating on, but similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Require time'

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

Firms are intending to use more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond 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 really legalise sports betting wagering, leaving that concern to regional lawmakers.

That is expected to cause considerable variation in how companies get certified, where can happen, and which events are open to speculation - with big implications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn every year depending on aspects like how many states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think the majority of 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly profits.

But bookmakers face a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

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

States have actually likewise been sluggish to legalise numerous forms of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is normally seen in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former chief 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 states UK firms must approach the market carefully, choosing partners with care and avoiding bad moves that might cause regulator reaction.

"This is an opportunity for the American sports betting wagerer ... 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 partnerships'

As legalisation starts, sports betting companies are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a percentage of revenue as an "integrity charge".

International business deal with the added challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to defend their grass.
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Analysts say UK firms will require to strike partnerships, using their knowledge and technology in order to make inroads.

They point to SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The business has actually been buying the US market considering that 2011, when it purchased three US firms to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has become a home name in Nevada however that's not necessarily the objective everywhere.

"We certainly mean to have a really significant brand name presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

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

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