firms bet on US after sports betting wager ruling
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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, new rules on sports betting entered effect in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.
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The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
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The industry sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially suitable.

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But the industry states depending on the US remains a dangerous bet, as UK business face complicated state-by-state guideline and competition from entrenched local interests.

"It's something that we're really focusing on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to regional legislators.

That is anticipated to result in considerable variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $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 big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in yearly earnings.

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

US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have likewise been slow to legalise lots of types of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is typically viewed in its own classification, "it clearly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former chief executive 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 firms need to approach the marketplace thoroughly, selecting partners with caution and preventing errors that could lead to regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to collect a portion of earnings as an "integrity fee".

International business face the added challenge of an effective existing video gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their turf.

Analysts say UK firms will need to strike collaborations, using their expertise and technology in order to make inroads.

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

"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'
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Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.

The business has been buying the US market given that 2011, when it acquired 3 US firms to establish an existence in Nevada.

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

It works as danger manager 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 actually become a family name in Nevada however that's not necessarily the objective all over.

"We definitely mean to have a really significant brand existence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."

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

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