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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Sherman

Business press reporter, New york city

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

From Tuesday, new guidelines on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.

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

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

The market sees a "once in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.

Why the gambling market faces an unsure future

How does illegal sports betting work and what are the worries?

But the market says depending on the US remains a dangerous bet, as UK companies deal with complex state-by-state regulation and competition from entrenched local interests.
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"It's something that we're truly concentrating on, however similarly we do not desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.

'Take some time'

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

Firms are wishing to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

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

That is expected to lead to substantial variation in how companies get accredited, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the market.

Potential income varieties from $4.2 bn to practically $20bn annually depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 research 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 believe most 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 require time'."

'Remains to be seen"

Chris Grove, handling 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 yearly income.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a regular sight.

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip till fairly 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 slow to legalise numerous kinds of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
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While sports betting is generally seen in its own category, "it clearly remains to be seen whether it gets the sort of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

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

Now a consultant, he states UK firms need to approach the market carefully, picking partners with care and avoiding errors that could lead to regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is an opportunity for company," he states. "It really depends on the outcome of [state] legislation and how the service operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to gather a percentage of earnings as an "stability cost".

International business face the included obstacle of a powerful existing gaming market, with casino operators, state-run lotteries and Native American people that are looking for to defend their grass.

Analysts state UK companies will need to strike partnerships, offering their knowledge and technology in order to make inroads.
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They indicate SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the truths.

The company has actually been investing in the US market given that 2011, when it acquired three US firms to establish a presence in Nevada.

William Hill now employs about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
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It works as threat manager 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 become a home name in Nevada but that's not always the goal all over.

"We certainly plan to have a really considerable brand name presence in New Jersey," he said. "In other states, it will just depend on guideline and possibly who our regional partner is."

"The US is going to be the greatest sports betting wagering market on the planet," he added. "Obviously that's not going to happen on day one."

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