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UK wagering firms bet on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on wagering entered 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 modifications 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 allow sports betting wagering.
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The industry sees a "as soon as in a generation" chance 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 firms, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially suitable.

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But the market says depending on the US stays 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 fantasy sports betting website FanDuel.

'Take 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 published 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 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, leaving that question to regional legislators.

That is anticipated to lead to substantial variation in how companies get accredited, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the market.

Potential income ranges from $4.2 bn to almost $20bn annually depending on elements like the number of states move 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'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think many individuals ... are looking 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'."
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'Remains to be seen"

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

But bookmakers face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.

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

In the popular imagination, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have also been slow to legalise lots of types of online gambling, despite a 2011 Justice Department viewpoint that appeared to remove challenges.

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

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

Now an expert, he states UK firms should approach the market carefully, picking partners with care and avoiding bad moves that could cause regulator reaction.

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

'It will be collaborations'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to gather a portion of profits as an "integrity charge".

International business face the included challenge of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to protect their grass.

Analysts state UK companies will need to strike collaborations, using their competence and technology in order to make inroads.

They indicate SBTech's current statement that it is supplying innovation 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 innovation," Mr Hawkley said.

'It will just depend'

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

The company has been investing in the US market given that 2011, when it purchased three US firms to develop a presence in Nevada.

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

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

Mr Asher said William Hill has ended up being a family name in Nevada but that's not necessarily the objective all over.

"We certainly plan to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our local partner is."

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

More on this story

US ruling opens method for sports betting wagering

14 May 2018

Paddy Power buys fantasy sports betting site

23 May 2018
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