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UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on wagering came 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 end up being 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" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.
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For UK companies, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry states depending on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competition from entrenched regional interests.

"It's something that we're truly concentrating on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.
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'Require time'

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

Firms are hoping to take advantage of more of that activity after last month's decision, which overruled 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 in fact legalise sports betting wagering, leaving that concern to regional legislators.

That is expected to lead to substantial variation in how firms get licensed, where sports betting can take place, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential income varieties from $4.2 bn to nearly $20bn each year depending on elements like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I believe the majority of people ... are looking 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 take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in annual income.

But bookies face a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.

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

States have actually also been slow to legalise numerous kinds of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

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

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

Now a consultant, he says UK firms need to approach the marketplace thoroughly, selecting partners with care and avoiding errors that might cause regulator reaction.

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

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of income as an "integrity cost".

International business deal with the added difficulty of a powerful existing gaming industry, with casino operators, state-run lottos and Native American people that are seeking to defend their grass.

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

They point to SBTech's current announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

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

'It will simply depend'

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

The company has been purchasing the US market since 2011, when it acquired three US firms to establish a presence in Nevada.

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

It works as threat manager for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.
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Mr Asher said William Hill has become a family name in Nevada however that's not necessarily the objective all over.

"We definitely plan to have a very considerable brand existence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our regional partner is."

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

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