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UK wagering companies bet on US after sports betting wager ruling

5 June 2018

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 guidelines on sports betting entered effect in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
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The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

The market sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with consolidation, increased online competition and from UK regulators, the timing is particularly appropriate.
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But the industry says counting on the US remains a dangerous bet, as UK companies face complex state-by-state regulation and competition from established local interests.

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

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external published in January.

Firms are wanting to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is anticipated to lead to substantial variation in how companies get licensed, where sports betting wagering can happen, and which events are open to speculation - with big implications for the size of the marketplace.

Potential profits ranges from $4.2 bn to practically $20bn annually depending upon elements like how many states relocate to legalise, Oxford Economics estimated in a 2017 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 specialists KPMG.

Now, he stated: "I think most individuals ... 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"
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Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in yearly revenue.

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

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

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

States have likewise been sluggish to legalise many kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.
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While sports betting wagering is usually seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
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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.

Now an expert, he says UK firms should approach the marketplace thoroughly, picking partners with care and avoiding bad moves that could lead to regulator reaction.

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

'It will be collaborations'
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As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to collect a percentage of earnings as an "integrity fee".

International business face the added obstacle of a powerful existing video gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to protect their grass.

Analysts say UK firms will need to strike collaborations, providing their know-how and technology in order to make inroads.

They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'
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Joe Asher, primary executive at William Hill US, is clear-eyed about the truths.

The business has been investing in the US market because 2011, when it bought 3 US firms to develop a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

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

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

"We definitely intend to have a very considerable 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 wagering market in the world," he added. "Obviously that's not going to happen on day one."

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