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UK sports betting companies bet on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on sports betting entered impact in Delaware, a small east coast state about two 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 method for states to permit sports betting wagering.

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

For UK firms, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

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But the industry says relying on the US remains a dangerous bet, as UK business face complex state-by-state regulation and competition from established regional interests.

"It's something that we're really concentrating on, but similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

'Take time'

The US represented 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 wanting to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few 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 wagering, leaving that concern to regional lawmakers.

That is expected to lead to substantial variation in how companies get licensed, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the .

Potential profits ranges from $4.2 bn to practically $20bn each year depending on factors 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 substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe 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 require time'."

'Remains to be seen"

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

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

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

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

States have actually likewise been sluggish to legalise numerous kinds of online gambling, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.

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

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

Now a consultant, he states UK companies should approach the marketplace carefully, picking partners with care and preventing bad moves that might lead to regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of profits as an "integrity charge".

International companies face the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are seeking to safeguard their turf.

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

They indicate SBTech's current statement 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 everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The company has been investing in the US market since 2011, when it acquired three US companies to develop an existence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed collaborations 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 ended up being a household name in Nevada however that's not necessarily the objective everywhere.

"We certainly plan to have a very significant brand name presence in New Jersey," he said. "In other states, it will just depend on regulation and potentially who our regional partner is."

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

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