UK wagering firms gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business reporter, New york city
It's high stakes for UK companies as sports betting starts to spread out in America.
From Tuesday, new rules on wagering came into impact 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 could 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 "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are grappling with combination, increased online competition and harder rules from UK regulators, the timing is particularly suitable.
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But the industry says depending on the US remains a dangerous bet, as UK companies face complicated state-by-state policy and competitors from established local interests.
"It's something that we're actually focusing on, however similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external published in January.
Firms are hoping to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to regional lawmakers.
That is expected to lead to significant variation in how companies get accredited, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the market.
Potential earnings varieties from $4.2 bn to almost $20bn yearly depending on factors like how lots 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 specialists KPMG.
Now, he said: "I believe many people ... are taking a look at this as, 'it's a chance but 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, anticipates that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual profits.
But bookies face a far different landscape in America than they carry out in the UK, where sports betting shops 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 wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been slow to legalise many kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is typically viewed in its own category, "it clearly remains to be seen whether it gets the type of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.
David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK firms need to approach the market thoroughly, selecting partners with caution and avoiding missteps that might lead to regulator reaction.
"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for service," he states. "It really is dependent on the result of [state] legislation and how the service operators pursue the opportunity."
'It will be partnerships'
As legalisation starts, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a portion of earnings as an "stability fee".
International business face the added challenge of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to defend their grass.
Analysts state UK firms will need to strike collaborations, providing their know-how and technology in order to make inroads.
They indicate SBTech's current statement that it is providing innovation 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, however it will be partnerships 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 company has actually been buying the US market given that 2011, when it bought 3 US firms to establish an existence in Nevada.
William Hill now uses about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has invested millions alongside a regional developer in a New Jersey horse racing track.
Mr Asher stated William Hill has become a home name in Nevada but that's not necessarily the objective all over.
"We certainly mean to have a very considerable brand name existence in New Jersey," he said. "In other states, it will simply depend upon policy and potentially who our local partner is."
"The US is going to be the biggest sports betting wagering market on the planet," he included. "Obviously that's not going to take place on the first day."
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