UK wagering firms 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 companies as sports betting wagering starts to spread in America.

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

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

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

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

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

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

"It's something that we're truly concentrating on, but similarly we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income 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 outside of Nevada and a few 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, leaving that question to regional legislators.

That is anticipated to lead to considerable variation in how companies get certified, where sports betting wagering can happen, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential income varieties from $4.2 bn to practically $20bn each year depending on elements like the number of states move to legalise, Oxford Economics 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 specialists KPMG.

Now, he said: "I think the majority of people ... are taking a look 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly income.
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But bookmakers deal with a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

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

States have likewise been sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is usually viewed in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now an expert, he states UK companies should approach the marketplace thoroughly, selecting partners with care and avoiding bad moves that might result in regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is an opportunity for business," he says. "It really is reliant on the result of [state] legislation and how business operators pursue the chance."
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'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to collect a percentage of profits as an "integrity fee".

International business deal with the included challenge of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their grass.

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

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

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

'It will simply 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 bought 3 US companies to establish a presence in Nevada.

William Hill now uses about 450 people in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has invested millions along with a local designer 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 objective everywhere.

"We certainly mean to have a really considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and potentially who our local partner is."

"The US is going to be the greatest sports betting market worldwide," he included. "Obviously that's not going to take place on day one."

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