UK wagering companies gamble on US after sports betting wager ruling
5 June 2018
By Natalie Sherman
Business press reporter, New York
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new guidelines on sports betting entered into impact in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
The modifications are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
The market sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are grappling with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly opportune.
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But the industry says counting on the US remains a dangerous bet, as UK companies deal with complicated state-by-state regulation and competitors from established local interests.
"It's something that we're truly concentrating on, but similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US dream sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external released in January.
Firms are intending to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.
The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional legislators.
That is expected to result in considerable variation in how firms get licensed, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the market.
Potential earnings ranges from $4.2 bn to almost $20bn yearly depending upon aspects like the number of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a great deal of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I think many people ... are looking 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 take some time'."
'Remains to be seen"
Chris Grove, handling 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.
But bookmakers face a far different landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.
US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip till relatively just recently.
In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of challenges.
While sports betting wagering is normally 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 teacher at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served jail time.
Now a consultant, he says UK firms need to approach the market carefully, choosing partners with caution and avoiding missteps that might result in regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for service," he states. "It truly is dependent on the result of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of income as an "integrity fee".
International business face the added obstacle of an effective existing video gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to defend their grass.
Analysts state UK firms will need to strike collaborations, using their expertise and innovation in order to make inroads.
They point to SBTech's recent announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals 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.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The company has been purchasing the US market because 2011, when it purchased three US companies to establish a presence in Nevada.
William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.
It works as threat manager for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a family name in Nevada but that's not always the goal everywhere.
"We definitely intend to have a really considerable brand presence in New Jersey," he said. "In other states, it will just depend upon regulation and potentially who our local partner is."
"The US is going to be the greatest sports betting market worldwide," he included. "Obviously that's not going to occur on day one."
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