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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

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

From Tuesday, new rules 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 changes are the first in what could become a wave of legalisation after the 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 brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

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

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But the industry says counting on the US stays a dangerous bet, as UK business face complex state-by-state policy and competitors from entrenched regional interests.

"It's something that we're truly focusing on, but equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take time'

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

Firms are wanting to take advantage of 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.

The ruling discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.

That is anticipated to lead to significant variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to almost $20bn each year depending upon factors 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe many people ... 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 take some time'."

'Remains to be seen"

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

But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
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States have actually also been slow to legalise numerous forms of online gaming, despite a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting is typically viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

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

Now a specialist, he says UK companies ought to approach the marketplace thoroughly, selecting partners with caution and preventing missteps that could lead to regulator reaction.

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

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to collect a portion of earnings as an "stability fee".

International companies face the included obstacle of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are looking for to safeguard their grass.

Analysts state UK companies will require to strike partnerships, providing their competence and innovation in order to make inroads.
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They point to SBTech's current statement that it is providing innovation 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, however it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has actually been buying the US market considering that 2011, when it acquired three US firms to establish a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a regional designer 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 objective everywhere.

"We certainly intend to have a very substantial brand existence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our regional partner is."

"The US is going to be the biggest 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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