UK sports betting companies gamble 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 rules on sports betting came into effect in Delaware, a small 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 very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.
The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research at Davy.
For UK companies, which are facing debt consolidation, increased online competition and tougher rules from UK regulators, the timing is especially suitable.
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But the market states counting on the US remains a risky bet, as UK business face complicated state-by-state regulation and competitors from entrenched local interests.
"It's something that we're truly concentrating on, however equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.
'Require time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external released in January.
Firms are wanting to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed 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 really legalise sports betting, leaving that question to local lawmakers.
That is expected to lead to substantial variation in how companies get certified, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the market.
Potential income ranges from $4.2 bn to nearly $20bn every year depending on aspects like how numerous states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he said: "I believe the majority of people ... are looking 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, handling director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly income.
But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a frequent sight.
US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip up until fairly recently.
In the popular imagination, sports betting wagering has long been connected 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 barriers.
While sports betting wagering is typically viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he says UK companies must approach the market thoroughly, selecting partners with caution and avoiding errors that might cause regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm not exactly sure whether it is a chance for company," he says. "It really is dependent 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, as well as requests by US sports betting leagues, which wish to gather a percentage of revenue as an "stability charge".
International business deal with the included difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to protect their turf.
Analysts state UK firms will need to strike collaborations, offering their knowledge and innovation in order to make inroads.
They point to SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will simply depend'
Joe Asher, primary executive 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 establish an existence in Nevada.
William Hill now utilizes about 450 people in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a home name in Nevada but that's not always the goal everywhere.
"We definitely mean to have an extremely considerable brand name presence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our local partner is."
"The US is going to be the biggest sports betting market on the planet," he included. "Obviously that's not going to occur on the first day."
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