UK sports betting companies gamble on US after sports betting wager judgment

5 June 2018

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 sports betting 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 very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads research study at Davy.

For UK companies, which are grappling with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.
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But the industry says relying on the US remains a risky bet, as UK business face complex state-by-state regulation and competition from entrenched regional interests.

"It's something that we're really concentrating on, but similarly we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external released in January.

Firms are wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.
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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 regional lawmakers.
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That is anticipated to lead to substantial variation in how firms get licensed, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential profits varieties from $4.2 bn to practically $20bn every year depending on elements like how numerous states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think many people ... are taking a look 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"
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Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, producing 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 shops are a frequent sight.

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

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

States have actually also been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
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While sports betting wagering is usually seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals believe 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 president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies need to approach the marketplace thoroughly, picking partners with care and avoiding mistakes that could result in regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of revenue as an "integrity fee".

International business deal with the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to protect their turf.

Analysts say UK companies will require to strike collaborations, providing their know-how and technology in order to make inroads.

They point to SBTech's current statement 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 everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has been investing in the US market since 2011, when it bought three US companies to establish an existence in Nevada.

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

It works as risk supervisor for the Delaware Lottery and has actually 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 but that's not always the objective all over.

"We certainly plan to have a very considerable brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and potentially who our regional partner is."

"The US is going to be the biggest sports betting market in the world," he added. "Obviously that's not going to happen on the first day."

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