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UK wagering companies gamble on US after sports betting wager judgment
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5 June 2018

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, brand-new guidelines on wagering entered into effect in Delaware, a tiny 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 very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.

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

For UK firms, which are grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the market states counting on the US stays a risky bet, as UK companies face complex state-by-state regulation and competition from entrenched local interests.

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

'Take some time'

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

Firms are wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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

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

Potential income varieties from $4.2 bn to practically $20bn annually depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think the majority of people ... are taking a look 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 take some time'."

'Remains to be seen"

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

But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

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

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

States have also been sluggish to legalise many kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting is normally seen in its own category, "it clearly 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 wagering policy.

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

Now a consultant, he says UK companies need to approach the market thoroughly, selecting partners with caution and preventing mistakes that could cause regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to gather a percentage of revenue as an "integrity fee".

International business deal with the added difficulty of an effective existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to safeguard their turf.

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

They point to SBTech's recent statement that it is offering innovation 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 partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The business has been investing in the US market given that 2011, when it acquired three US companies to establish a presence in Nevada.

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

It works as danger manager for the Delaware Lottery and has invested millions along with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has become a household name in Nevada however that's not always the goal all over.

"We definitely mean to have an extremely considerable brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our regional partner is."

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

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