UK Betting Firms Gamble on uS After Sports Wager Ruling

UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on wagering came into impact in Delaware, a tiny 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 method for states to enable sports betting wagering.

The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with consolidation, increased online competition and harder rules from UK regulators, the timing is especially opportune.

Register at Bet9ja using the promotion code YOHAIG for a N100,000 welcome bonus

Why the gaming market deals with an uncertain future

How does illegal sports betting work and what are the worries?

But the industry says counting on the US remains a risky bet, as UK companies deal with complicated state-by-state policy and competition from established local interests.

"It's something that we're really concentrating on, but equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming income 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 decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

The judgment found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local legislators.

That is expected to result in substantial variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn every year depending on elements like the number of states transfer to legalise, Oxford Economics approximated 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 consultants KPMG.

Now, he said: "I think the majority of people ... 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 take some time'."

'Remains to be seen"

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

But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.

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

While sports betting is usually seen in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals think it will," said 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 jailed in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a specialist, he says UK companies need to approach the market thoroughly, choosing partners with caution and preventing missteps that might lead to regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to gather a percentage of income as an "stability fee".

International business face the included challenge of an effective existing video gaming market, with gambling establishment 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, offering their competence and innovation in order to make inroads.

They point to SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The company has been buying the US market since 2011, when it bought three US companies to establish a presence in Nevada.

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

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

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not always the goal everywhere.

"We certainly mean to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our local partner is."