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UK wagering companies gamble on US after sports betting wager judgment
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5 June 2018
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By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new rules on wagering came 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 might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

The market sees a “when in a generation” opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the market states counting on the US remains a risky bet, as UK companies face complicated state-by-state and competitors from established local interests.

“It’s something that we’re really concentrating on, but equally we do not desire to overhype it,” said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US dream sports betting site FanDuel.

‘Take some time’

The US accounted for about 23% of the world’s $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external published in January.

Firms are wanting to take advantage of more of that activity after last month’s decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

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 question to regional legislators.

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

Potential profits varieties from $4.2 bn to almost $20bn annually depending on aspects like how numerous states relocate 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 huge’”, said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: “I believe a lot of individuals … 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 time’.”

‘Remains to be seen”

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

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

US laws limited gambling mostly to Native American lands and Nevada’s Las Vegas strip up until reasonably recently.

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

States have also been slow to legalise many forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is typically viewed in its own classification, “it clearly stays to be seen whether it gets the type of momentum people think it will,” stated Keith Miller, law professor at Drake University and co-author of a book about sports betting 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 says UK firms ought to approach the marketplace carefully, selecting partners with care and preventing mistakes that could cause regulator backlash.

“This is a chance for the American sports betting bettor … I’m unsure whether it is a chance for organization,” he says. “It truly is dependent on the result of [state] legislation and how business operators pursue the opportunity.”

‘It will be collaborations’

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to collect a percentage of revenue as an “stability fee”.

International companies deal with the added difficulty of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their turf.

Analysts state UK firms will need to strike partnerships, providing their know-how and innovation in order to make inroads.

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

“It will be a win-win for everybody, but it will be partnerships and it will be driven by technology,” Mr Hawkley said.

‘It will just depend’

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

The business has been buying the US market since 2011, when it acquired 3 US firms to develop a presence in Nevada.

William Hill now employs 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 actually invested millions together with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada however that’s not always the goal all over.

“We certainly mean to have an extremely considerable brand presence in New Jersey,” he stated. “In other states, it will just depend on policy and potentially who our regional partner is.”

“The US is going to be the most significant sports betting wagering market on the planet,” he included. “Obviously that’s not going to happen on day one.”

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