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

Business press reporter, New york city

It's high stakes for UK companies as sports betting starts to spread in America.

From Tuesday, new rules on wagering came into impact in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey could 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 way for states to permit sports betting wagering.

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

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

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But the industry says depending on the US remains a risky bet, as UK companies face complex state-by-state policy and competitors from established local interests.

"It's something that we're actually concentrating on, however equally we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting website FanDuel.

'Take 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 published in January.
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Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few 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 wagering, leaving that concern to local lawmakers.

That is anticipated to result in considerable variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with big implications for the size of the marketplace.

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

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

Now, he stated: "I think 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 take some time'."

'Remains to be seen"

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

But bookies deal with a far different landscape in America than they carry out in the UK, where wagering stores are a frequent sight.
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US laws limited sports betting largely to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

States have also been slow to legalise many forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting wagering is typically seen in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

David Carruthers is the former chief 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 firms should approach the marketplace carefully, picking partners with caution and preventing errors that could result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for company," he states. "It truly is reliant on the result 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, as well as requests by US sports betting leagues, which desire to collect a percentage of income as an "stability fee".

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

Analysts state UK companies will need to strike partnerships, using their know-how and innovation in order to make inroads.

They indicate SBTech's recent statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everyone, but it will be and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The business has been purchasing the US market given that 2011, when it purchased 3 US companies to develop an existence in Nevada.

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

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

Mr Asher stated William Hill has become a family name in Nevada but that's not always the goal all over.

"We certainly intend to have a very substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our local partner is."

"The US is going to be the biggest sports betting wagering market worldwide," he included. "Obviously that's not going to take place on the first day."

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