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UK wagering firms gamble on US after sports betting wager judgment
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5 June 2018

It's high stakes for UK companies as sports betting starts to spread out in America.

From Tuesday, new guidelines on sports betting entered effect in Delaware, a small east coast state about two hours from Washington.

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

The changes are the first in what could 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 new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and from UK regulators, the timing is particularly opportune.

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But the industry says depending on the US remains a risky bet, as UK companies face complex state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're truly focusing on, but equally we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting website FanDuel.

'Take time'

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

Firms are wanting 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 in fact legalise sports betting wagering, leaving that question to regional lawmakers.

That is anticipated to cause significant variation in how companies get accredited, where sports betting can take place, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to almost $20bn every year depending on aspects like the number of states transfer 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 big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.

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

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have also been slow to legalise many forms of online gaming, regardless of a 2011 Justice Department opinion that appeared to eliminate challenges.
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While sports betting is generally viewed in its own category, "it plainly stays to be seen whether it gets the kind of momentum individuals believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK companies ought to approach the marketplace carefully, selecting partners with care and avoiding errors that could lead to regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is a chance for organization," he states. "It truly depends on the result of [state] legislation and how the service operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which desire to collect a percentage of income as an "stability cost".

International business face the included obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

Analysts state UK firms will need to strike partnerships, using their know-how and innovation in order to make inroads.

They point to SBTech's recent announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
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"It will be a win-win for everybody, but it will be partnerships 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 truths.

The company has actually been buying the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.

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

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

Mr Asher said William Hill has become a home name in Nevada but that's not always the objective everywhere.

"We definitely mean to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially who our local partner is."
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"The US is going to be the biggest sports betting market worldwide," he included. "Obviously that's not going to happen on day one."

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