UK betting firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

It’s high stakes for UK companies as sports betting starts to spread out in America.

From Tuesday, new rules on sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could 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 method for states to enable sports betting.

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

For UK companies, which are facing combination, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.

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But the market says relying on the US remains a risky bet, as UK companies face complex state-by-state policy and competition from entrenched local interests.

“It’s something that we’re actually focusing on, however equally we do not wish to overhype it,” stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

‘Require time’

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

Firms are wishing to use more of that activity after last month’s decision, which overruled a 1992 federal law that disallowed states outside of 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 in fact legalise sports betting, leaving that question to local legislators.

That is expected to cause considerable variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with huge implications for the size of the market.

Potential profits ranges from $4.2 bn to nearly $20bn every year depending on factors like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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“There was a lot of ‘this is going to be huge’”, stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: “I think many people … are taking a look 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 some time’.”

‘Remains to be seen”

Chris Grove, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.

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

US laws restricted 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 connected to a 1919 baseball World Series match-fixing scandal.

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

While sports betting is typically seen in its own classification, “it plainly stays to be seen whether it gets the type of momentum people 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 previous president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK companies need to approach the market carefully, selecting partners with caution and avoiding mistakes that might lead to regulator reaction.

“This is an opportunity for the American sports betting gambler … I’m unsure whether it is a chance for business,” he says. “It actually depends on the result of [state] legislation and how the company operators pursue the opportunity.”

‘It will be collaborations’

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 collect a percentage of profits as an “stability cost”.
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International business face the included challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to defend their grass.

Analysts state UK firms will require to strike collaborations, using their proficiency and innovation in order to make inroads.

They point to SBTech’s current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.
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“It will be a win-win for everyone, but it will be collaborations and it will be driven by innovation,” Mr Hawkley said.

‘It will just depend’

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

The business has been purchasing the US market considering that 2011, when it purchased 3 US companies to develop a presence in Nevada.

William Hill now employs about 450 individuals in the US and has actually revealed 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 designer in a New Jersey horse racing track.

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

“We certainly plan to have a really substantial brand presence 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 biggest sports betting wagering market on the planet,” he included. “Obviously that’s not going to take place on day one.”

More on this story

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