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

Business reporter, New york city

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

From Tuesday, new rules on betting entered impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin 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 method for states to allow sports betting.

The industry sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.
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For UK companies, which are coming to grips with consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly appropriate.

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But the industry says depending on the US remains a risky bet, as UK business deal with complex state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're actually focusing on, however equally we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

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

Firms are intending to take of more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is expected to result in considerable variation in how companies get certified, where sports betting can occur, and which events are open to speculation - with huge implications for the size of the market.

Potential income ranges from $4.2 bn to practically $20bn yearly depending on elements 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'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think most people ... are looking at this as, 'it's a chance but it's not going to be $20bn and it's going to be state by state and it's going to require 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, developing a market with about $6bn in annual profits.

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

US laws restricted betting largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have also been slow to legalise lots of types of online betting, despite a 2011 Justice Department opinion that appeared to eliminate challenges.

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

David Carruthers is the former president 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 must approach the marketplace carefully, selecting partners with care and avoiding missteps that might result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for company," he says. "It truly is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity charge".

International companies face the included obstacle of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts say UK firms will need to strike partnerships, offering their competence and innovation in order to make inroads.

They point to SBTech's recent statement that it is supplying innovation 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 collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

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

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

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

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

"We definitely intend to have an extremely substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

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

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