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UK sports betting firms bet on US after sports betting wager judgment

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 small east coast state about two hours from Washington.

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

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

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

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

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But the market says relying on the US remains a risky bet, as UK business face complicated state-by-state policy and competitors from established regional interests.

"It's something that we're really focusing on, however equally we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.
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'Take time'

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

Firms are intending to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of 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 actually legalise sports betting wagering, leaving that concern to regional legislators.

That is anticipated to result in considerable variation in how companies get certified, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to nearly $20bn yearly depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
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"There was a great deal of 'this is going to be big'", said Will Hawkley, of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... are looking at this as, 'it's an opportunity 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in annual revenue.

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

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

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

States have likewise been slow to legalise many kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove barriers.
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While sports betting wagering is typically seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.
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Now a specialist, he says UK firms need to approach the market thoroughly, choosing partners with caution and avoiding bad moves that might lead to regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm not sure whether it is an opportunity for service," he says. "It actually depends on the result of [state] legislation and how business operators pursue the opportunity."
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'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a percentage of revenue as an "integrity charge".

International business face the added challenge of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are looking for to protect their turf.

Analysts state UK firms will require to strike partnerships, offering their expertise and technology in order to make inroads.

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

"It will be a win-win for everyone, however it will be partnerships 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 business has actually been purchasing the US market considering that 2011, when it acquired three US companies to develop an existence in Nevada.

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

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

Mr Asher said William Hill has become a family name in Nevada but that's not always the goal all over.

"We definitely plan to have a very substantial brand existence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our local partner is."

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

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