UK wagering 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 companies as sports betting starts to spread in .

From Tuesday, new rules on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.

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

The modifications are the very first in what could end up being 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, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with combination, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.

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But the industry states depending on the US stays a dangerous bet, as UK business face complex state-by-state regulation and competition from entrenched regional interests.

“It’s something that we’re really focusing on, but similarly we don’t want to overhype it,” said James Midmer, representative at Paddy Power Betfair, which recently bought the US dream sports betting website FanDuel.

‘Take some time’

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

Firms are wanting to use more of that activity after last month’s decision, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local lawmakers.

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

Potential profits ranges from $4.2 bn to practically $20bn yearly depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

“There was a great deal of ‘this is going to be big’”, said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: “I think the majority of people … are looking at this as, ‘it’s a chance 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”
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Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.
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But bookies face a far various landscape in America than they perform in the UK, where wagering shops are a regular sight.

US laws minimal gaming mainly to Native American lands and Nevada’s Las Vegas strip till fairly just recently.

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

States have also been sluggish to legalise lots of kinds of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is generally viewed in its own category, “it plainly remains to be seen whether it gets the type of momentum individuals think it will,” said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now a consultant, he says UK companies should approach the marketplace thoroughly, choosing partners with caution and preventing mistakes that could lead to regulator backlash.
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“This is an opportunity for the American sports betting bettor … I’m not sure whether it is a chance for organization,” he states. “It truly is reliant on the result of [state] legislation and how business operators pursue the chance.”

‘It will be partnerships’

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of profits as an “stability cost”.

International companies deal with the added difficulty of an effective existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

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

They point to SBTech’s recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

“It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation,” Mr Hawkley said.

‘It will simply depend’

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

The company has been purchasing the US market because 2011, when it purchased 3 US firms to develop 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 threat supervisor for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has become a family name in Nevada but that’s not always the objective all over.

“We certainly intend to have a really considerable brand existence in New Jersey,” he said. “In other states, it will simply depend on regulation and potentially who our local partner is.”

“The US is going to be the most significant sports betting wagering market worldwide,” he included. “Obviously that’s not going to take place on the first day.”

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