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UK sports betting firms bet on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

The changes are the first in what could end up being 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 expert David Jennings, who heads leisure research at Davy.

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

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But the market says depending on the US remains 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 truly focusing on, but equally we do not desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, according to a report by Technavio, external released 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 beyond Nevada and a few others from authorising sports betting wagering.

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

That is expected to result in significant variation in how firms get accredited, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential profits ranges from $4.2 bn to nearly $20bn every year depending on factors like the number of states move to legalise, Oxford Economics approximated 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 said: "I think many people ... are looking at this as, 'it's an opportunity however 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, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly earnings.

But bookies face a far different landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.

US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

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

While sports betting is typically viewed in its own classification, "it clearly stays to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

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

Now a consultant, he states UK companies should approach the market carefully, selecting partners with care and avoiding errors that might 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 says. "It truly on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to collect a percentage of earnings as an "stability fee".

International companies face the included challenge of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are seeking to safeguard their turf.

Analysts state UK companies will need to strike collaborations, offering their know-how 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.
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"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The business has actually been buying the US market because 2011, when it bought 3 US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually 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 household name in Nevada however that's not necessarily the goal everywhere.
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"We definitely mean to have a really considerable brand name presence in New Jersey," he said. "In other states, it will simply depend on policy and potentially who our regional partner is."
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"The US is going to be the greatest sports betting market worldwide," he added. "Obviously that's not going to happen on the first day."

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