UK sports betting companies 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 firms as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on wagering entered into impact in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications 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 allow sports betting.

The market sees a "when in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly suitable.

Why the betting industry deals with an uncertain future

How does prohibited sports betting work and what are the fears?

But the industry states relying on the US remains a dangerous bet, as UK companies deal with complicated state-by-state guideline and competition from entrenched local interests.

"It's something that we're actually focusing on, but similarly we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take some time'

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

Firms are hoping to take advantage of 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 wagering.

The judgment discovered 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 lawmakers.

That is expected to result in considerable variation in how companies get certified, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn each year depending on factors like how many states move to legalise, Oxford Economics approximated 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 specialists KPMG.

Now, he stated: "I think many people ... are looking 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 some time'."

'Remains to be seen"

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

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

US laws limited sports betting mainly 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 gaming, in spite of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is normally viewed in its own classification, "it clearly remains 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 regulation.

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

Now an expert, he states UK companies ought to approach the market carefully, selecting partners with care and preventing errors that might cause regulator backlash.

"This is a chance for the American sports betting gambler ... I'm not sure whether it is an opportunity for business," he says. "It really is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a portion of earnings as an "integrity fee".

International business face the included obstacle of an effective existing gaming market, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.

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

They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The company has been purchasing the US market since 2011, when it purchased 3 US firms to develop a presence in Nevada.

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

It works as threat manager for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.

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

"We certainly plan to have a really substantial brand existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our regional partner is."

"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to take place on the first day."

More on this story

US judgment opens way for sports betting wagering

14 May 2018

Paddy Power purchases dream sports betting site

23 May 2018