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UK wagering companies bet on US after sports betting wager ruling
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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 wagering starts to spread in America.

From Tuesday, new rules on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

For UK companies, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.

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But the industry states counting on the US stays a risky bet, as UK business face complicated state-by-state guideline and from entrenched regional interests.

"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream 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 released in January.

Firms are wishing to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed 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 in fact legalise sports betting wagering, leaving that concern to regional legislators.

That is expected to cause considerable variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with huge implications for the size of the marketplace.
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Potential revenue ranges from $4.2 bn to almost $20bn every year depending upon factors like how numerous states move 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 substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I believe many individuals ... 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 require time'."

'Remains to be seen"

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

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.
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US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have likewise been slow to legalise many forms of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

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

Now a specialist, he states UK firms must approach the market carefully, selecting partners with care and avoiding mistakes that could lead to regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of profits as an "stability charge".

International companies deal with the added challenge of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their grass.

Analysts say UK firms will require to strike collaborations, offering their know-how and innovation in order to make inroads.
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They indicate SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

"It will be a win-win for everyone, but it will be partnerships 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 truths.

The company has actually been investing in the US market given that 2011, when it acquired 3 US companies to establish an existence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually become a family name in Nevada but that's not always the goal everywhere.

"We definitely intend to have a really substantial brand name presence in New Jersey," he stated. "In other states, it will just 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 happen on day one."

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