UK wagering companies gamble on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, new rules on sports betting entered into result in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

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

For UK companies, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.

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But the market states relying on the US remains a risky bet, as UK companies deal with regulation and competitors from established regional interests.

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

'Require time'

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

Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is expected to lead to significant variation in how companies get accredited, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.
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"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think many 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly income.
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But bookmakers face a far different landscape in America than they do in the UK, where wagering shops are a regular sight.

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.

In the popular creativity, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
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States have also been slow to legalise numerous kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
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Now a consultant, he says UK firms should approach the market carefully, picking partners with caution and preventing missteps that might result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm not sure whether it is a chance for organization," he says. "It really depends on the outcome of [state] legislation and how the 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 desire to gather a portion of revenue as an "integrity fee".

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

Analysts state UK companies will require to strike partnerships, offering their proficiency and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The business has been investing in the US market given that 2011, when it bought three US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.
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Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the objective all over.

"We certainly mean to have an extremely considerable brand name existence 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 greatest sports betting wagering market in the world," he added. "Obviously that's not going to take place on day one."

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