UK wagering firms 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 companies as sports betting wagering starts to spread out in America.
From Tuesday, brand-new rules on sports betting entered effect in Delaware, a tiny east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.
The market sees a "as soon as in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
For UK firms, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.
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But the industry states counting on the US remains a dangerous bet, as UK companies face complex state-by-state policy and competition from entrenched local interests.
"It's something that we're truly focusing on, but equally we do not want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.
'Require time'
The US accounted for 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 wanting to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
The ruling discovered 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 anticipated to result in significant variation in how companies get licensed, where sports betting can happen, and which events are open to speculation - with big implications for the size of the market.
Potential revenue varieties from $4.2 bn to nearly $20bn annually depending on aspects like the number of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for specialists KPMG.
Now, he said: "I believe many people ... are looking at this as, 'it's a chance 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, managing 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 yearly profits.
But bookmakers deal with a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.
US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip until relatively 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 numerous forms of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate obstacles.
While sports betting wagering is normally viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he states UK firms need to approach the marketplace carefully, picking partners with caution and avoiding bad moves that might cause regulator reaction.
"This is an opportunity for the American sports betting bettor ... I'm not sure whether it is an opportunity for business," he says. "It really is reliant on the outcome of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of profits as an "stability fee".
International business deal with the included obstacle of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American people that are looking for to safeguard their turf.
Analysts state UK companies will require to strike collaborations, providing their know-how and technology 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 kind of deals likely to materialise.
"It will be a win-win for everyone, however it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The company has actually been purchasing the US market since 2011, when it bought three US firms to establish an existence 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 risk supervisor for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
Mr Asher said William Hill has ended up being a family name in Nevada however that's not necessarily the objective everywhere.
"We definitely plan to have a very significant brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our regional partner is."
"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to happen on the first day."
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