UK sports betting companies bet on US after sports betting wager judgment
5 June 2018
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, new rules on sports betting came into effect in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The modifications 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" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.
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But the industry says relying on the US stays a risky bet, as UK business face complicated state-by-state regulation and competition from established local interests.
"It's something that we're truly concentrating on, however similarly we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Take some time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external released in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.
The judgment 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 local legislators.
That is expected to cause significant variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the market.
Potential revenue ranges from $4.2 bn to almost $20bn annually depending on elements like the number of states transfer 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 said: "I believe the majority of individuals ... are taking a look 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 take time'."
'Remains to be seen"
Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly profits.
But bookmakers face a far various landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip up until relatively just recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise many forms of online sports betting, despite a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is normally viewed in its own classification, "it plainly remains to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he says UK firms should approach the marketplace carefully, choosing partners with caution and preventing missteps that could cause regulator backlash.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for service," he says. "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 firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of revenue as an "stability fee".
International business face the included challenge of a powerful existing gaming market, with casino operators, state-run lotteries and Native American people that are seeking to defend their turf.
Analysts state UK companies will need to strike partnerships, offering their expertise and technology in order to make inroads.
They indicate SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everyone, but it will be partnerships 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 realities.
The business has been investing in the US market given that 2011, when it purchased 3 US companies to develop an existence in Nevada.
William Hill now uses about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has actually invested millions alongside a local developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a home name in Nevada but that's not necessarily the objective everywhere.
"We certainly mean to have an extremely significant brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our regional partner is."
"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to take place on the first day."
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