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

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, brand-new guidelines on wagering entered 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 become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The industry sees a "as soon as in a generation" chance to a brand-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 grappling with combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry states depending on the US stays a risky bet, as UK business face complicated state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're truly focusing on, but similarly we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Require time'

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

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

The judgment discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to regional lawmakers.

That is expected to lead to substantial variation in how companies get licensed, where sports betting wagering can happen, and which occasions are open to speculation - with huge implications for the size of the market.

Potential revenue varieties from $4.2 bn to almost $20bn every year depending upon aspects like how lots of states relocate 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 specialists 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly revenue.

But bookmakers face a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

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

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

States have also been slow to legalise lots of kinds of online sports betting, despite a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is typically viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the former chief executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK companies ought to approach the marketplace carefully, picking partners with caution and avoiding errors that could cause regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which want to gather a portion of revenue as an "integrity fee".

International companies face the added challenge of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

Analysts state UK firms will require to strike collaborations, offering their know-how and technology in order to make inroads.

They indicate SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

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

'It will just depend'

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

The business has been investing in the US market given that 2011, when it acquired three US companies to develop a presence in Nevada.

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

It works as threat supervisor 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 however that's not necessarily the objective all over.

"We certainly intend to have an extremely significant brand name presence in New Jersey," he said. "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 on the planet," he added. "Obviously that's not going to happen on day one."

More on this story

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