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UK sports betting firms bet on US after sports betting wager judgment
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5 June 2018
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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 guidelines on sports betting entered into result 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 might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

For UK companies, which are grappling with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.

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But the market says relying on the US remains a dangerous bet, as UK companies face complicated state-by-state policy and competitors from entrenched regional interests.

"It's something that we're really focusing on, but equally we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are intending to tap into 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 wagering.

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

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

Potential revenue ranges from $4.2 bn to nearly $20bn yearly depending upon factors like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the Association.

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

Now, he stated: "I think most people ... are looking 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual revenue.

But bookies deal with a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

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

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

States have actually likewise been slow to legalise lots of forms of online gambling, despite a 2011 Justice Department opinion that appeared to remove challenges.

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

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

Now a specialist, he says UK firms must approach the market carefully, choosing partners with caution and preventing bad moves that might result in regulator reaction.

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

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of profits as an "stability cost".

International business deal with the included difficulty of an effective existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.

Analysts say UK firms will need to strike partnerships, offering their expertise and technology in order to make inroads.

They indicate SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 said.

'It will simply depend'

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

The business has actually been investing in the US market since 2011, when it purchased three US companies to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a household name in Nevada however that's not always the objective everywhere.

"We certainly plan to have a very considerable brand existence in New Jersey," he said. "In other states, it will simply depend upon regulation and potentially who our local partner is."

"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to happen on the first day."

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