UK wagering firms 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 starts to spread in America.
From Tuesday, new guidelines on betting came into impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey might start 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 method for states to permit sports betting.
The market sees a "when in a generation" opportunity to establish a 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 facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.
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But the industry states counting on the US stays a risky bet, as UK companies face complex state-by-state policy and competitors from entrenched local interests.
"It's something that we're truly focusing on, but similarly we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external published in January.
Firms are intending to take advantage of 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 wagering.
The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to local legislators.
That is anticipated to cause significant variation in how firms get certified, where sports betting wagering can occur, and which events are open to speculation - with big implications for the size of the market.
Potential income varieties from $4.2 bn to almost $20bn every year depending upon factors like the number of states transfer to legalise, Oxford Economics estimated 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 said: "I think a lot of individuals ... 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, predicts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual earnings.
But bookmakers deal with a far various landscape in America than they perform in the UK, where sports betting shops are a regular sight.
US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip till fairly just recently.
In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise lots of kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting wagering is normally seen in its own category, "it plainly remains to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an overseas online sportsbook and served prison time.
Now an expert, he states UK firms must approach the market carefully, selecting partners with caution and avoiding bad moves that could cause regulator backlash.
"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is an opportunity for business," he states. "It actually depends on the outcome of [state] legislation and how business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of profits as an "integrity cost".
International companies face the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to protect their grass.
Analysts state UK companies will need to strike partnerships, using their expertise and innovation 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 kind of offers most likely to materialise.
"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The business has actually been purchasing the US market given that 2011, when it bought three US companies to establish a presence in Nevada.
William Hill now uses about 450 individuals in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions together with a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a family name in Nevada however that's not necessarily the goal everywhere.
"We certainly plan to have a really substantial brand existence in New Jersey," he said. "In other states, it will simply depend upon regulation and potentially who our local partner is."
"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to occur on the first day."
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