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UK sports betting firms gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business reporter, New york city

It's high stakes for UK firms as sports betting wagering starts to spread in America.
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From Tuesday, brand-new rules on sports betting came into effect in Delaware, a small east coast state about 2 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 way for states to enable sports betting wagering.

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

For UK firms, which are facing consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially opportune.

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But the market states depending on the US remains a risky bet, as UK companies face complex state-by-state guideline and competition from entrenched regional interests.

"It's something that we're truly concentrating on, however equally we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming in 2015, according to a report by Technavio, external released in January.

Firms are hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a few 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 concern to regional lawmakers.

That is expected to cause substantial variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential profits ranges from $4.2 bn to practically $20bn each year depending upon aspects like the number of states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think 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 time'."

'Remains to be seen"

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

But bookies deal with a far different landscape in America than they carry out in the UK, where wagering shops are a regular sight.

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

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

David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a specialist, he says UK firms must approach the market thoroughly, choosing partners with care and preventing errors that might lead to regulator reaction.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for organization," he states. "It truly is reliant on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

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

International business deal with the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their turf.

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

They point to SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 truths.

The company has been investing in the US market since 2011, when it bought three US companies to develop a presence in Nevada.

William Hill now employs about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.

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

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

"We definitely intend to have an extremely substantial brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our regional partner is."

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

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