UK wagering firms gamble on US after sports betting wager ruling

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 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 start accepting sports betting bets as early as Friday.

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The market sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing combination, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.

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But the market states depending on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competition from established local interests.

"It's something that we're truly concentrating on, however similarly we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are wishing to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
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The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to local legislators.

That is expected to cause considerable variation in how companies get certified, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn annually depending on aspects like how numerous states move to legalise, Oxford Economics approximated in a 2017 research study for the Association.

"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.
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Now, he stated: "I believe the majority of people ... are taking a look at this as, 'it's an opportunity 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"

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

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

US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

States have actually also been sluggish to legalise many forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

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

David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
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Now a specialist, he states UK firms ought to approach the market carefully, picking partners with care and avoiding missteps that might result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is an opportunity for company," he says. "It truly depends on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which want to collect a percentage of revenue as an "integrity charge".

International business face the included difficulty of a powerful existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to safeguard their turf.

Analysts say UK companies will require to strike collaborations, using their knowledge and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is offering technology 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, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The business has actually been buying the US market given that 2011, when it bought three US firms to develop a presence in Nevada.

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

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

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

"We definitely intend to have a very substantial brand name 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 on the planet," he added. "Obviously that's not going to occur on the first day."
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