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UK wagering companies 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 in America.

From Tuesday, new rules on wagering came into impact in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The changes are the very first in what might end up being 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 develop a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are facing combination, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

Why the sports betting market faces an unpredictable 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 business deal with complex state-by-state policy and competitors from established local interests.

"It's something that we're truly concentrating on, however similarly we don't want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Require time'

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

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

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

That is expected to cause significant variation in how firms get accredited, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

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

"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think most individuals ... are taking a look at this as, 'it's an opportunity 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 wagering in some form by 2023, creating a market with about $6bn in annual income.

But bookies face a far different landscape in America than they perform in the UK, where wagering shops are a frequent sight.

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually also been sluggish to legalise numerous types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

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

David Carruthers is the former primary executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK firms need to approach the market carefully, picking partners with care and avoiding bad moves that might cause regulator reaction.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is a chance for organization," he says. "It actually is dependent on the result of [state] legislation and how the service operators pursue the chance."

'It will be collaborations'

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

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

Analysts say UK firms will require to strike partnerships, offering their competence 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 type of deals likely to materialise.

"It will be a win-win for everybody, however 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 realities.

The business has actually been purchasing the US market given that 2011, when it bought 3 US companies to establish an existence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a household name in Nevada but that's not necessarily the goal everywhere.

"We definitely plan to have a really significant brand existence in New Jersey," he stated. "In other states, it will just depend on regulation and possibly who our is."

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

More on this story

US judgment opens way for sports betting

14 May 2018

Paddy Power purchases fantasy sports betting website

23 May 2018