UK wagering companies gamble on US after ruling

5 June 2018
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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 impact in Delaware, a tiny east coast state about 2 hours from Washington.

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

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

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

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

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But the industry states relying on the US stays a dangerous bet, as UK business deal with complicated state-by-state policy and competitors from entrenched local interests.

"It's something that we're actually focusing on, but similarly we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.

'Require time'

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

Firms are wishing to take advantage of 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 wagering, leaving that question to local legislators.

That is expected to cause substantial variation in how companies get licensed, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to nearly $20bn each year depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research 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 specialists KPMG.

Now, he said: "I think a lot of 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 take 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 annual profits.
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But bookmakers face a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have actually likewise been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

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

David Carruthers is the former president 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 states UK firms should approach the marketplace carefully, selecting partners with caution and avoiding errors that could result in regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity fee".
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International companies deal with the included difficulty of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to defend their turf.

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

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

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

'It will just depend'

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

The business has been buying the US market because 2011, when it bought three US firms to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.
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Mr Asher said William Hill has become a home name in Nevada but that's not always the goal all over.

"We definitely intend to have a very considerable brand name existence in New Jersey," he said. "In other states, it will just depend upon 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 take place on the first day."

US ruling opens way for sports betting wagering