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

Business 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 impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin 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 method for states to permit sports betting .

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

For UK companies, which are facing combination, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the market states counting on the US stays a dangerous bet, as UK business deal with complex state-by-state policy and competitors from entrenched regional interests.

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

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income 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 decision, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local lawmakers.
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That is expected to lead to significant variation in how firms get accredited, where sports betting wagering can happen, 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 yearly depending upon factors like how many states transfer 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'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe a lot of individuals ... 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 require time'."

'Remains to be seen"

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

But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

US laws limited 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 connected to a 1919 baseball World Series match-fixing scandal.

States have also been sluggish to legalise numerous types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is normally seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum people think 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he states UK companies should approach the marketplace thoroughly, selecting partners with caution and avoiding mistakes 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 business," he states. "It really is dependent on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be collaborations'

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 collect a percentage of earnings as an "integrity fee".

International companies deal with the included challenge of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to defend their grass.

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

They indicate SBTech's recent announcement 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 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 actually been purchasing the US market because 2011, when it purchased three US firms to establish a presence in Nevada.

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

It works as risk supervisor for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.

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

"We certainly mean to have a really substantial brand name presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and potentially who our regional partner is."

"The US is going to be the most significant sports betting wagering market in the world," he added. "Obviously that's not going to take place on the first day."

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