UK wagering companies gamble on US after sports betting wager ruling

5 June 2018
bit.ly
By Natalie Sherman

Business press reporter, New York

It's high stakes for UK companies as starts to spread in America.

From Tuesday, new rules on wagering entered result in Delaware, a tiny east coast state about 2 hours from Washington.

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

The changes are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

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

For UK firms, which are grappling with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly opportune.

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But the market states depending on the US remains a dangerous bet, as UK companies face complicated state-by-state guideline and competition from entrenched local interests.

"It's something that we're actually concentrating on, however similarly we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.

'Require time'

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

Firms are intending to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

The ruling 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 regional lawmakers.

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

Potential profits varieties from $4.2 bn to practically $20bn each year depending on factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming 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 said: "I think most people ... are taking a look 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 require time'."

'Remains to be seen"

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

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

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip until relatively 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 forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting is usually seen in its own category, "it clearly stays to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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 prison time.

Now a consultant, he says UK companies should approach the marketplace thoroughly, picking partners with care and avoiding bad moves that might cause regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for company," he states. "It truly depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which want to gather a portion of profits as an "stability cost".

International companies deal with the added challenge of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to defend their grass.

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

They indicate SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.

"It will be a win-win for everyone, however it will be collaborations 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 company has actually been investing in the US market given that 2011, when it bought three US firms to establish an existence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a family name in Nevada however that's not necessarily the objective all over.

"We definitely intend to have a very substantial brand existence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."

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

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