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UK wagering companies bet 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 starts to spread in America.

From Tuesday, brand-new guidelines on wagering came into impact in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

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

For UK companies, which are coming to grips with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.

Why the gaming industry faces an unsure future

How does sports betting work and what are the fears?

But the market states relying on the US remains a risky bet, as UK business face complex state-by-state policy and competition from entrenched regional interests.

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

'Require time'

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

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

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

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

Potential income ranges from $4.2 bn to practically $20bn each year depending upon factors like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I believe a lot of individuals ... 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 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 kind by 2023, producing a market with about $6bn in yearly earnings.

But bookmakers deal with a far different landscape in America than they do in the UK, where sports betting stores are a regular sight.

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip up until fairly recently.

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

States have actually likewise been slow to legalise numerous kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of 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 think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now a specialist, he states UK companies should approach the market thoroughly, picking partners with caution and preventing missteps that might cause regulator reaction.

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

'It will be partnerships'
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As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of profits as an "stability charge".

International business deal with the added obstacle of an effective existing gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their grass.

Analysts say UK companies will need to strike partnerships, providing their proficiency and technology in order to make inroads.

They point to SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort 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 technology," Mr Hawkley stated.

'It will simply depend'

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

The business has been investing in the US market because 2011, when it purchased three US firms to develop a presence in Nevada.

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

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

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

"We certainly intend to have a really substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our local partner is."

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

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