UK wagering firms gamble on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

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

The changes are the very 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.

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

For UK firms, which are facing combination, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

Why the gambling market faces an uncertain future

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

But the market says depending on the US stays a risky bet, as UK companies face complex state-by-state guideline and competitors from established local interests.

"It's something that we're really focusing on, but equally we do not wish to overhype it," stated James Midmer, representative 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 profits in 2015, according to a report by Technavio, external published in January.
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Firms are to use more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a few 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 wagering, leaving that question to regional lawmakers.

That is anticipated to lead to substantial variation in how firms get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to practically $20bn yearly depending on factors like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I believe many 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 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, creating a market with about $6bn in annual earnings.

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

US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

States have also been slow to legalise lots of forms of online betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

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

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

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

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

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which want to gather a portion of profits as an "integrity charge".

International companies face the added difficulty of an effective existing gaming market, with casino operators, state-run lottos and Native American people that are seeking to protect their turf.

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

They indicate SBTech's current announcement that it is providing 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 everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has actually been buying the US market because 2011, when it acquired 3 US companies to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.

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

Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the objective all over.

"We certainly intend to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our regional 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 day one."

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