UK sports betting on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business 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 into impact 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 could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The market sees a "once in a generation" opportunity to establish a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.
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For UK firms, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is particularly suitable.

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But the industry says counting on the US stays a risky bet, as UK companies face complex state-by-state regulation and competition from established regional interests.

"It's something that we're truly concentrating on, but similarly we do not desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.

'Take some time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income in 2015, according to a report by Technavio, external released in January.

Firms are wishing to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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 concern to local legislators.
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That is anticipated to result in substantial variation in how firms get accredited, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn each year depending on elements like how numerous states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.
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Now, he said: "I believe many 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, forecasts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual profits.

But bookies face a far different landscape in America than they perform in the UK, where sports betting stores are a frequent sight.
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US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have actually likewise been slow to legalise many types of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is generally viewed in its own category, "it plainly remains to be seen whether it gets the kind of momentum people believe it will," stated 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 jail time.

Now a consultant, he states UK firms must approach the marketplace thoroughly, choosing partners with care and avoiding errors that might cause regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is an opportunity for service," he says. "It actually depends on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of profits as an "stability charge".

International business deal with the included challenge of a powerful existing video gaming market, with casino operators, state-run lottos and Native American people that are seeking to defend their turf.

Analysts say UK firms will need to strike collaborations, offering their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.

"It will be a win-win for everybody, however 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 realities.

The business has been investing in the US market given that 2011, when it purchased 3 US firms to develop a presence in Nevada.

William Hill now employs about 450 people in the US and has revealed collaborations with casinos in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has actually 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 goal everywhere.

"We definitely intend to have a very considerable brand presence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our local partner is."

"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to occur on the first day."

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