UK Betting Firms Gamble on United States After Sports Wager Ruling

UK betting companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

It’s high stakes for UK firms as sports betting wagering starts to spread out in America.

From Tuesday, brand-new guidelines on sports betting came into impact in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

The market sees a “as soon as in a generation” opportunity to establish a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

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But the industry states counting on the US remains a risky bet, as UK companies face complex state-by-state policy and competition from interests.

“It’s something that we’re truly concentrating on, but equally we don’t wish to overhype it,” said James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

‘Require 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 published in January.

Firms are hoping to use more of that activity after last month’s decision, which overruled a 1992 federal law that barred states outside of Nevada and a few 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, leaving that question to local legislators.

That is anticipated to lead to considerable variation in how firms get licensed, where sports betting can happen, and which events are open to speculation – with big ramifications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to almost $20bn each year depending upon factors like the number of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

“There was a lot of ‘this is going to be huge'”, stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: “I believe a lot of individuals … are taking a look 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 require time’.”

‘Remains to be seen”

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

But bookmakers deal with a far different landscape in America than they do in the UK, where betting shops are a frequent sight.

US laws limited gambling mostly to Native American lands and Nevada’s Las Vegas strip 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 sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting is generally viewed in its own classification, “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 guideline.

David Carruthers is the previous 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 must approach the market carefully, choosing partners with care and preventing errors that might lead to regulator backlash.

“This is an opportunity for the American sports betting bettor … I’m not exactly sure whether it is an opportunity for company,” he states. “It actually is reliant on the result of [state] legislation and how the company operators pursue the opportunity.”

‘It will be collaborations’

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to collect a percentage of income as an “stability cost”.

International business deal with the included challenge of an effective existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts state UK firms will require to strike collaborations, using 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 kind of offers most likely to materialise.

“It will be a win-win for everyone, but it will be partnerships and it will be driven by technology,” 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 bought 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has announced collaborations with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions together 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 but that’s not necessarily the objective everywhere.

“We certainly plan to have a very substantial brand presence in New Jersey,” he said. “In other states, it will simply depend on policy and potentially who our regional 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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