UK sports betting firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting came into effect in Delaware, a tiny 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 might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

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

For UK firms, which are facing consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially appropriate.

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But the market states depending on the US stays a risky bet, as UK companies face complex state-by-state regulation and competition from entrenched regional interests.

“It’s something that we’re truly focusing on, however equally we don’t wish to overhype it,” stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

‘Require time’

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

Firms are hoping to tap into more of that activity after last month’s decision, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from sports betting.

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

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

Potential profits ranges from $4.2 bn to practically $20bn every year depending upon aspects like the number of states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

“There was a great deal of ‘this is going to be big’”, stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: “I think the majority of people … 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, creating a market with about $6bn in yearly earnings.

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

US laws minimal gambling largely to Native American lands and Nevada’s Las Vegas strip until relatively recently.

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

States have likewise been sluggish to legalise numerous forms of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.
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While sports betting wagering is typically seen in its own category, “it clearly stays to be seen whether it gets the type of momentum individuals believe it will,” stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he says UK companies need to approach the market carefully, picking partners with care and preventing mistakes that could lead to regulator backlash.

“This is a chance for the American sports betting wagerer … I’m not sure whether it is an opportunity for company,” he states. “It actually depends on the outcome 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, in addition to requests by US sports betting leagues, which wish to gather a portion of income as an “integrity cost”.
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International companies deal with the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to safeguard their turf.

Analysts say UK companies will require to strike partnerships, offering their knowledge and technology in order to make inroads.

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

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

‘It will just depend’

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

The company has actually been investing in the US market considering that 2011, when it bought 3 US firms to establish an existence in Nevada.

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

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has become a family name in Nevada however that’s not necessarily the objective everywhere.

“We definitely mean to have a really considerable brand name existence in New Jersey,” he said. “In other states, it will just depend upon policy and potentially 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 take place on the first day.”

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