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

Business press reporter, New York

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

From Tuesday, new rules on sports betting came into impact in Delaware, a tiny east coast state about two hours from Washington.

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

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

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

For UK companies, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the market states depending on the US stays a risky bet, as UK business deal with complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're really concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US site FanDuel.

'Require time'

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

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

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional lawmakers.

That is expected to lead to considerable variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the market.

Potential profits ranges from $4.2 bn to almost $20bn annually depending upon elements like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think a lot of individuals ... are taking a look at this as, 'it's a chance however 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"
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Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly earnings.
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But bookies face a far different landscape in America than they do in the UK, where wagering shops are a frequent sight.

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually likewise been slow to legalise lots of forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he says UK companies ought to approach the market carefully, picking partners with caution and preventing missteps that might lead to regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a percentage of income as an "integrity charge".

International business deal with the included difficulty of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their turf.

Analysts state UK firms will require to strike partnerships, offering their expertise and innovation in order to make inroads.

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

"It will be a win-win for everybody, but it will be partnerships 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 realities.

The company has been investing in the US market considering that 2011, when it acquired 3 US companies to establish an existence in Nevada.

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

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

Mr Asher stated William Hill has become a household name in Nevada however that's not always the goal everywhere.

"We definitely intend to have an extremely considerable brand presence in New Jersey," he said. "In other states, it will simply depend upon guideline and possibly who our regional partner is."

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

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