UK betting companies 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 out in America.
From Tuesday, brand-new rules on sports betting entered 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 modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.
The industry sees a "when in a generation" opportunity to develop a brand-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 competition and tougher rules from UK regulators, the timing is particularly opportune.
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But the market says relying on the US stays a risky bet, as UK companies deal with complicated state-by-state regulation and competitors from established local interests.
"It's something that we're actually focusing on, but equally we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming income last year, according to a report by Technavio, external released in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting wagering.
The ruling 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 legislators.
That is anticipated to result in significant variation in how companies get licensed, where sports betting can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.
Potential profits varieties from $4.2 bn to practically $20bn each year depending upon factors like the number of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.
Now, he stated: "I think many 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 wagering in some kind by 2023, producing a market with about $6bn in annual revenue.
But bookies deal with a far different landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.
US laws restricted gaming largely to Native American lands and Nevada's Las Vegas strip up until relatively recently.
In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have also been slow to legalise many kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting is typically viewed in its own category, "it clearly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering policy.
David Carruthers is the former chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.
Now an expert, he says UK firms need to approach the marketplace thoroughly, picking partners with caution and avoiding missteps that might cause regulator backlash.
"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for company," he states. "It truly depends on the outcome of [state] legislation and how business operators pursue the chance."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to gather a percentage of income as an "stability charge".
International business face the added difficulty of an effective existing video gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to defend their turf.
Analysts state UK companies will need to strike partnerships, offering their competence 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 type 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 said.
'It will simply depend'
Joe Asher, president at William Hill US, is clear-eyed about the realities.
The company has been purchasing the US market because 2011, when it purchased 3 US companies to establish a presence in Nevada.
William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as danger manager for the Delaware Lottery and has 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 objective everywhere.
"We certainly plan to have a really significant brand presence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our local partner is."
"The US is going to be the greatest sports betting market in the world," he added. "Obviously that's not going to happen on the first day."
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