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UK sports betting companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

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

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

The changes 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.

The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based expert David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

Why the betting market deals with an unsure future

How does unlawful sports betting wagering work and what are the worries?

But the market says relying on the US remains a risky bet, as UK business deal with complex state-by-state guideline and competitors from entrenched regional interests.

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

'Take 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 intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of 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 actually legalise sports betting wagering, leaving that concern to local lawmakers.

That is anticipated to cause substantial variation in how companies get licensed, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn yearly depending on aspects 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are looking at this as, 'it's an opportunity 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"

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

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a regular sight.

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been sluggish to legalise many kinds of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting wagering is usually viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies need to approach the marketplace thoroughly, picking partners with care and preventing bad moves that might lead to regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for organization," he says. "It really is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to gather a percentage of profits as an "stability fee".

International business deal with the included challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their grass.

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

They indicate SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

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

'It will simply depend'

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

The business has actually been buying the US market given that 2011, when it purchased three US firms to establish an existence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions alongside a regional 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 always the goal all over.

"We definitely mean to have a very considerable brand presence in New Jersey," he stated. "In other states, it will simply depend upon policy and potentially who our local partner is."

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

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