UK wagering companies bet on US after sports betting wager judgment
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5 June 2018
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It's high stakes for UK companies as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on wagering entered into impact in Delaware, a small east coast state about two hours from Washington.

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

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

The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated 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 suitable.

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But the industry says relying on the US remains a dangerous bet, as UK companies face complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're really focusing on, however equally we do not desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Require time'

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

Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local legislators.

That is expected to cause considerable variation in how companies get licensed, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the market.

Potential profits varieties from $4.2 bn to almost $20bn yearly depending upon aspects like the number of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think many people ... are taking a look 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 time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly revenue.

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

US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip until relatively just 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 lots of forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting wagering is generally viewed in its own classification, "it plainly remains 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 guideline.
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David Carruthers is the former chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK companies need to approach the market thoroughly, picking partners with caution and preventing mistakes that might lead to regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for company," he says. "It truly is dependent on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which desire to gather a percentage of income as an "stability fee".

International business face the added difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to defend their turf.

Analysts state UK firms will need to strike collaborations, using their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

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

'It will just depend'

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

The company has actually been purchasing the US market because 2011, when it bought 3 US companies to establish an existence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a home name in Nevada however that's not necessarily the objective all over.

"We definitely plan to have a really considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on policy and potentially 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 take place on day one."

US ruling opens method for sports betting