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

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting entered into impact in Delaware, a tiny east coast state about 2 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 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 "once 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 coming to grips with combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.
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But the market says depending on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competitors from established regional interests.

"It's something that we're truly concentrating on, but equally we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take time'

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

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

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to local legislators.

That is expected to cause significant variation in how companies get licensed, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential income varieties from $4.2 bn to practically $20bn yearly depending upon factors like how many states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
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"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 believe 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 some time'."

'Remains to be seen"
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Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in yearly earnings.

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

US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have actually also been sluggish to legalise lots of forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.

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

David Carruthers is the previous president 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 should approach the marketplace thoroughly, selecting partners with care and preventing missteps that might lead to regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to gather a portion of revenue as an "stability cost".

International business face the included challenge of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American people that are looking for to protect their turf.
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Analysts state UK companies will require to strike collaborations, offering their know-how and innovation in order to make inroads.

They point to SBTech's recent statement 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 everyone, but it will be and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has actually been investing in the US market considering that 2011, when it purchased 3 US firms to develop a presence in Nevada.

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

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

Mr Asher said William Hill has become a family name in Nevada but that's not always the goal everywhere.

"We definitely intend to have a very significant brand presence in New Jersey," he stated. "In other states, it will simply depend upon policy and possibly who our regional partner is."

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

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