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UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

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

From Tuesday, brand-new guidelines on sports betting entered effect in Delaware, a small 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 enable sports betting.

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

For UK companies, which are coming to grips with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially opportune.

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But the market states relying on the US remains a risky bet, as UK companies face complex state-by-state guideline and competition from established regional interests.

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

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings last year, according to a report by Technavio, external released in January.
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Firms are hoping to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to regional lawmakers.

That is anticipated to lead to substantial variation in how companies get certified, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn each year depending on elements like how many states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe most individuals ... 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly profits.

But bookies face a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have likewise been slow to legalise lots of kinds of online betting, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is typically viewed in its own classification, "it clearly stays to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
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Now a specialist, he says UK companies must approach the marketplace thoroughly, selecting partners with caution and avoiding missteps that might result in regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a percentage of income as an "integrity fee".

International companies deal with the added challenge of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their turf.
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Analysts state UK companies will require to strike partnerships, using their know-how and technology in order to make inroads.

They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

"It will be a win-win for everybody, but it will be and it will be driven by technology," Mr Hawkley said.
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'It will simply depend'
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Joe Asher, president at William Hill US, is clear-eyed about the realities.

The company has actually been purchasing the US market since 2011, when it bought 3 US firms to establish a presence 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 danger manager for the Delaware Lottery and has actually invested millions together with a local developer in a New Jersey horse racing track.

Mr Asher stated William Hill has ended up being a home name in Nevada but that's not necessarily the goal everywhere.

"We definitely intend to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our regional partner is."

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

US ruling opens method for sports betting