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UK sports betting companies bet on US after sports betting wager judgment
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5 June 2018
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By Natalie Sherman

Business reporter, New York

It's high stakes for UK companies as sports betting starts to spread in America.

From Tuesday, new rules on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.

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

The changes are the very 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 industry sees a "when in a generation" chance to establish a brand-new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.

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But the market says depending on the US stays a dangerous bet, as UK companies deal with complicated state-by-state regulation and competition from established local interests.

"It's something that we're truly concentrating on, however equally we do not desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are wanting to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

The ruling found 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 to result in considerable variation in how companies get certified, where sports betting can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn annually depending on factors like the number of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe many people ... are taking a look 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in annual income.

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

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till fairly just 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 kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to remove barriers.

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 teacher at Drake University and co-author of a book about sports betting regulation.

David Carruthers is the previous chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies should approach the market carefully, selecting partners with caution and preventing mistakes that might lead to regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of income as an "integrity cost".

International companies deal with the added obstacle of an effective existing video gaming market, with casino operators, state-run lottery games and Native American people that are looking for to defend their grass.

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

They indicate SBTech's current statement that it is offering 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, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.

The company has been investing in the US market because 2011, when it bought three US companies to develop an existence in Nevada.

William Hill now utilizes about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.

It works as danger manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually become a home name in Nevada however that's not always the objective everywhere.

"We certainly plan to have an extremely significant brand existence in New Jersey," he stated. "In other states, it will simply depend upon policy and possibly who our regional partner is."

"The US is going to be the most significant sports betting wagering market in the world," he included. "Obviously that's not going to occur on day one."

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