UK sports betting companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new rules on sports betting came into effect in Delaware, a tiny east coast state about 2 hours from Washington.

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

The modifications 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 allow sports betting.

The market sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

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But the industry states depending on the US stays a dangerous bet, as UK companies face complicated state-by-state regulation and competitors from established local interests.
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"It's something that we're actually focusing on, however similarly we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site 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 struck down a 1992 federal law that disallowed 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, leaving that question to local legislators.

That is anticipated to result in substantial variation in how companies get accredited, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to nearly $20bn annually depending on factors like the number of states transfer 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 substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's an opportunity but 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, forecasts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual profits.

But bookies face a far different landscape in America than they perform in the UK, where sports betting stores are a regular sight.
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US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have actually also been slow to legalise many forms of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is usually seen in its own category, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

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 consultant, he states UK companies ought to approach the marketplace carefully, selecting partners with caution and avoiding missteps that might cause regulator reaction.

"This is an opportunity for the gambler ... I'm not sure whether it is a chance for company," he states. "It actually is reliant on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which desire to gather a portion of profits as an "integrity cost".

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

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

They indicate SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

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

'It will just depend'

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

The business has actually been purchasing the US market considering that 2011, when it purchased 3 US companies to develop an existence in Nevada.

William Hill now uses about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
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It works as threat manager for the Delaware Lottery and has invested millions along with a local developer in a New Jersey horse racing track.
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Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the objective everywhere.

"We certainly mean to have a really considerable brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our local partner is."

"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to take place on the first day."

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