UK betting companies bet on US after sports betting wager judgment
5 June 2018
By Natalie Sherman
Business press reporter, New york city
It's high stakes for UK firms as sports betting wagering starts to spread out in America.
From Tuesday, new rules on wagering came into result in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey could 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 industry sees a "when in a generation" opportunity to establish 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 consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.
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But the market states counting on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competitors from established local interests.
"It's something that we're actually concentrating on, but equally we do not want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take some time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming profits 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 disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.
The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to local lawmakers.
That is anticipated to lead to considerable variation in how firms get licensed, where sports betting wagering can occur, and which events are open to speculation - with big implications for the size of the marketplace.
Potential earnings ranges from $4.2 bn to nearly $20bn annually depending upon factors like the number of states relocate 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 huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe the majority of 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 require time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly profits.
But bookmakers face a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.
US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip up until relatively just recently.
In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise lots of types of online betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.
While sports betting wagering is generally viewed in its own category, "it clearly remains to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
Now an expert, he states UK firms should approach the marketplace carefully, selecting partners with care and preventing missteps that might cause regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for company," he says. "It really depends on the result of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to gather a portion of earnings as an "integrity charge".
International companies face the added obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to defend their turf.
Analysts state UK firms will need to strike collaborations, providing their expertise and innovation in order to make inroads.
They indicate SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.
"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
The business has been buying the US market considering that 2011, when it purchased three US companies to develop an existence in Nevada.
William Hill now employs about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a local developer in a New Jersey horse racing track.
Mr Asher said William Hill has become a household name in Nevada however that's not always the goal everywhere.
"We certainly plan to have a very significant brand name presence in New Jersey," he said. "In other states, it will just depend upon guideline and potentially who our regional partner is."
"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to occur on day one."
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