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UK wagering companies bet 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 wagering starts to spread in America.

From Tuesday, new guidelines on wagering came into effect in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

For UK firms, which are grappling with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry says counting on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're really focusing on, but similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings 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 disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

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

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

ranges from $4.2 bn to almost $20bn annually depending on elements like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... are looking 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 require time'."

'Remains to be seen"

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

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

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

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

States have also been sluggish to legalise lots of types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

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

Now a consultant, he states UK companies need to approach the marketplace thoroughly, picking partners with caution and preventing errors that might cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for business," he states. "It actually depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

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

International business deal with the included challenge of an effective existing video gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to safeguard their turf.

Analysts say UK firms will need to strike collaborations, using their proficiency 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 offers 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 simply depend'

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

The business has been investing in the US market since 2011, when it bought 3 US companies to develop a presence in Nevada.

William Hill now uses about 450 people in the US and has revealed partnerships with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not necessarily the goal everywhere.

"We definitely mean to have a very significant brand existence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."

"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to happen on day one."

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