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UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new guidelines on wagering entered into result in Delaware, a small east coast state about two hours from Washington.

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

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

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

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

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But the market states depending on the US remains a risky bet, as UK companies deal with complicated state-by-state guideline and competitors from entrenched local interests.
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"It's something that we're truly focusing on, but similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports betting website .

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue 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 choice, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

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

That is expected to lead to substantial variation in how firms get accredited, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to practically $20bn yearly depending upon elements like the number of states move 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe the majority of individuals ... are taking a look 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 time'."

'Remains to be seen"

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

US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip until relatively just recently.

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

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

While sports betting wagering is generally seen in its own category, "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 policy.

David Carruthers is the previous president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he states UK companies ought to approach the marketplace thoroughly, picking partners with caution and preventing errors that might cause regulator backlash.
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"This is a chance for the American sports betting wagerer ... I'm unsure whether it is an opportunity for business," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to collect a percentage of revenue as an "stability fee".

International companies face the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to defend their turf.

Analysts state UK firms will require to strike collaborations, using their knowledge and innovation in order to make inroads.

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

"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.
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'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 because 2011, when it purchased 3 US firms to develop an existence in Nevada.
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William Hill now utilizes about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually become a family name in Nevada however that's not necessarily the goal all over.

"We definitely plan to have a really significant brand name presence in New Jersey," he said. "In other states, it will simply depend upon regulation and possibly who our local partner is."

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

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