UK sports betting on US after sports betting wager ruling

5 June 2018
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It's high stakes for UK firms as sports betting wagering starts to spread in America.

From Tuesday, new guidelines on wagering came into impact in Delaware, a small 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 might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

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

For UK firms, which are grappling with debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.

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But the industry says relying on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competitors from entrenched local interests.

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

'Take time'

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

Firms are intending to tap into more of that activity after last month's decision, 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 really legalise sports betting, leaving that concern to local legislators.

That is anticipated to cause considerable variation in how companies get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn every year depending on factors like the number of states move to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I think many individuals ... are taking a look 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 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, creating a market with about $6bn in yearly income.

But bookmakers face a far different landscape in America than they carry out in the UK, where wagering shops are a frequent sight.

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip until fairly just recently.

In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.

States have actually likewise been slow to legalise numerous kinds of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting is typically seen in its own classification, "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 regulation.

David Carruthers is the former primary executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.
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Now an expert, he states UK companies should approach the market thoroughly, choosing partners with care and preventing mistakes that could lead to regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is an opportunity for organization," he states. "It really is reliant on the outcome of [state] legislation and how the organization operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of earnings as an "integrity charge".
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International business deal with the included difficulty of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their turf.

Analysts state UK companies will need to strike partnerships, providing their competence and technology in order to make inroads.

They indicate SBTech's recent statement that it is supplying innovation 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 everybody, however 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 business has actually been buying the US market because 2011, when it acquired 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has revealed collaborations with casinos in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.
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Mr Asher stated William Hill has actually become a family name in Nevada but that's not always the goal everywhere.

"We definitely mean to have a very significant brand name presence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."

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

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