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UK wagering firms bet on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new guidelines on betting entered impact in Delaware, a tiny east coast state about 2 hours from Washington.
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Neighbouring New Jersey could 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 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, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

Why the betting industry deals with an unsure future

How does prohibited sports betting wagering work and what are the worries?

But the industry says relying on the US stays a dangerous bet, as UK companies face complex state-by-state guideline and competition from entrenched regional interests.

"It's something that we're truly concentrating on, but similarly we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased 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 hoping to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

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

That is expected to lead to significant variation in how companies get accredited, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the market.

Potential earnings varieties from $4.2 bn to nearly $20bn annually depending on factors 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 big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe the majority of 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 take time'."

'Remains to be seen"

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

But bookies deal with a far different landscape in America than they perform in the UK, where betting shops are a regular sight.

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip till fairly just recently.
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In the popular creativity, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.

States have actually also been sluggish to legalise many types of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting wagering is normally seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
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David Carruthers is the previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he states UK firms should approach the marketplace thoroughly, choosing partners with care and preventing bad moves that could cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm uncertain whether it is an opportunity for business," he states. "It actually depends on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which want to collect a percentage of revenue as an "stability fee".

International business face the added obstacle of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

Analysts say UK companies will require to strike partnerships, offering their competence and technology in order to make inroads.

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

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

'It will just depend'

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

The company has actually been investing in the US market because 2011, when it purchased three US companies to develop an existence in Nevada.

William Hill now uses about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not always the objective all over.

"We certainly plan to have a really significant brand presence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our regional partner is."

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

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