UK sports betting companies bet 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 starts to spread in America.

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

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

The modifications are the very 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 industry sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are coming to grips with consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.

Why the sports betting industry deals with an uncertain future

How does illegal sports betting wagering work and what are the fears?

But the industry says relying on the US stays a risky bet, as UK business face complex state-by-state policy and competition from established local interests.

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

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue 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 struck down a 1992 federal law that 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 legislators.

That is expected to cause significant variation in how firms get accredited, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to almost $20bn each year depending on factors like the number of states relocate 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 consultants KPMG.

Now, he said: "I think many people ... are taking a look 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 take time'."

'Remains to be seen"

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

But bookies face a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been sluggish to legalise lots of forms of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is usually seen in its own category, "it plainly stays to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

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

Now a specialist, he states UK companies should approach the marketplace thoroughly, picking partners with care and preventing mistakes that might result in regulator backlash.

"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is a chance for organization," he says. "It truly is dependent on the result of [state] legislation and how the organization operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to gather a portion of income as an "integrity cost".

International companies deal with the added obstacle of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to defend their turf.

Analysts say UK firms will require to strike partnerships, offering their expertise and technology in order to make inroads.

They indicate SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.

"It will be a win-win for everyone, 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 investing in the US market since 2011, when it purchased three US firms to develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has ended up being a family name in Nevada however that's not necessarily the objective all over.

"We definitely intend to have a very considerable brand name presence in New Jersey," he stated. "In other states, it will simply depend upon policy and potentially who our regional partner is."

"The US is going to be the greatest sports betting market on the planet," he included. "Obviously that's not going to happen on day one."

More on this story

US ruling opens method for sports betting

14 May 2018

Paddy Power buys fantasy sports betting site

23 May 2018