UK wagering firms bet 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 starts to spread out in America.
From Tuesday, brand-new rules on wagering came into effect in Delaware, a tiny 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 might become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.
The market sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.
For UK firms, which are facing consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially suitable.
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But the market says counting on the US stays a dangerous bet, as UK business deal with complex state-by-state policy and competitors from entrenched local interests.
"It's something that we're actually focusing on, but equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external released in January.
Firms are wishing to use more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.
The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to local lawmakers.
That is expected to result in considerable variation in how firms get certified, where sports betting can occur, and which events are open to speculation - with big implications for the size of the market.
Potential earnings varieties from $4.2 bn to almost $20bn annually depending upon factors like how lots of states relocate 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 think the majority of 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 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 kind by 2023, producing a market with about $6bn in annual profits.
But bookies face a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.
US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip till relatively 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 sluggish to legalise numerous forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove obstacles.
While sports betting is typically seen in its own category, "it plainly stays to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.
David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.
Now a consultant, he says UK companies must approach the marketplace carefully, picking partners with caution and preventing missteps that could cause regulator reaction.
"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is a chance for business," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which want to collect a percentage of income as an "stability cost".
International business deal with the added obstacle of an effective existing video gaming industry, with casino operators, state-run lottos and Native American people that are looking for to protect their grass.
Analysts say UK companies will require to strike partnerships, providing their knowledge and innovation in order to make inroads.
They indicate SBTech's recent statement that it is supplying 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 everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will simply depend'
Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.
The company has actually been investing in the US market given that 2011, when it purchased three US firms to develop an existence in Nevada.
William Hill now uses about 450 individuals in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as threat supervisor for the Delaware Lottery and has invested millions alongside a local designer in a New Jersey horse racing track.
Mr Asher stated William Hill has ended up being a household name in Nevada however that's not necessarily the objective everywhere.
"We certainly plan to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our local partner is."
"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to take place on the first day."
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