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

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting entered result in Delaware, a tiny east coast state about 2 hours from .

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way 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, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

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But the industry states relying on the US remains a risky bet, as UK companies face complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're really focusing on, however similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take some time'

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

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

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

That is anticipated to cause substantial variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential income ranges 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 research 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 consultants KPMG.

Now, he said: "I believe many individuals ... are looking at this as, 'it's a chance 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual income.

But bookies face a far various landscape in America than they perform in the UK, where sports betting shops are a regular sight.

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip up until relatively recently.

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

States have actually also been sluggish to legalise many forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting is generally viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now an expert, he says UK firms should approach the marketplace carefully, picking partners with care and avoiding mistakes that could lead to regulator reaction.

"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for business," he says. "It really depends on the result of [state] legislation and how the company operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to gather a portion of profits as an "integrity cost".

International business deal with the included challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to protect their turf.

Analysts say UK firms will require to strike partnerships, offering their know-how and technology in order to make inroads.

They point to SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most 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 realities.

The business has actually been buying the US market because 2011, when it acquired three US companies to develop a presence in Nevada.

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

It works as risk manager for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a home name in Nevada however that's not necessarily the objective everywhere.

"We definitely plan to have a very significant brand presence in New Jersey," he said. "In other states, it will simply depend on policy and potentially who our regional partner is."

"The US is going to be the most significant sports betting market worldwide," he added. "Obviously that's not going to take place on day one."

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