UK wagering companies gamble on US after sports betting wager ruling
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 effect in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could start 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 way for states to enable sports betting.
The market sees a "once in a generation" opportunity to establish a brand-new market in sports betting-mad America, said 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 especially appropriate.
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But the market says depending on the US stays a risky bet, as UK business face complicated state-by-state guideline and competition from entrenched local interests.
"It's something that we're really focusing on, however equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.
'Require time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external published in January.
Firms are wishing to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.
The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.
That is expected to cause considerable variation in how companies get certified, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the market.
Potential income ranges from $4.2 bn to almost $20bn yearly depending upon elements like how lots of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.
"There was a great deal of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.
Now, he stated: "I think 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 take time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.
But bookies deal with a far different landscape in America than they do in the UK, where sports betting stores are a frequent sight.
US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip till fairly recently.
In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.
States have likewise been sluggish to legalise lots of kinds of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.
While sports betting wagering is typically viewed in its own category, "it plainly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he states UK firms need to approach the marketplace carefully, choosing partners with caution and preventing missteps that could lead to regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is a chance for service," he states. "It actually is reliant on the result of [state] legislation and how business operators pursue the opportunity."
'It will be collaborations'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to gather a portion of profits as an "stability cost".
International business face the included difficulty of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their grass.
Analysts state UK companies will require to strike partnerships, providing their expertise and technology in order to make inroads.
They point to SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has been buying the US market since 2011, when it purchased 3 US companies to develop a presence in Nevada.
William Hill now employs about 450 people in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.
Mr Asher said William Hill has become a family name in Nevada however that's not necessarily the goal all over.
"We certainly intend to have an extremely significant brand name presence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our local partner is."
"The US is going to be the biggest sports betting market on the planet," he added. "Obviously that's not going to happen on the first day."
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