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UK wagering companies bet 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 in America.
From Tuesday, brand-new guidelines on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.
Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.
The market sees a "once in a generation" chance to establish 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 facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially suitable.
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But the market says counting on the US remains a risky bet, as UK business deal with complex state-by-state regulation and competitors from entrenched regional interests.
"It's something that we're truly concentrating on, but similarly we don't wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently acquired the US site FanDuel.
'Take time'
The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external released in January.
Firms are wishing to use more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.
The ruling 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 anticipated to cause significant variation in how firms get certified, where sports betting wagering can take place, and which occasions are open to speculation - with big ramifications for the size of the market.
Potential revenue varieties from $4.2 bn to practically $20bn each year depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 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 consultants KPMG.
Now, he said: "I think many people ... are taking a look 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 require time'."
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'Remains to be seen"
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Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly earnings.
But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a regular sight.
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US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip until relatively just recently.
In the popular imagination, sports betting has actually long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually also been slow to legalise lots of forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove barriers.
While sports betting is typically seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.
David Carruthers is the previous chief executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.
Now a specialist, he says UK firms should approach the marketplace carefully, choosing partners with care and avoiding errors that could cause regulator backlash.
"This is a chance for the American sports betting gambler ... I'm uncertain whether it is a chance for organization," he says. "It truly is reliant on the outcome of [state] legislation and how business operators pursue the chance."
'It will be partnerships'
As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of income as an "integrity charge".
International companies face the added difficulty of an effective existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are seeking to protect their grass.
Analysts state UK firms will need to strike collaborations, offering their proficiency and innovation in order to make inroads.
They indicate SBTech's recent statement that it is supplying 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 everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.
'It will just depend'
Joe Asher, president at William Hill US, is clear-eyed about the truths.
The company has actually been buying the US market since 2011, when it acquired 3 US firms to develop a presence in Nevada.
William Hill now uses about 450 individuals in the US and has announced collaborations with casinos in Iowa and New Jersey.
It works as risk manager for the Delaware Lottery and has invested millions along with a regional developer in a New Jersey horse racing track.
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Mr Asher said William Hill has become a family name in Nevada but that's not necessarily the goal all over.
"We certainly mean to have an extremely substantial brand presence in New Jersey," he said. "In other states, it will just depend upon policy and possibly who our local partner is."
"The US is going to be the most significant sports betting market on the planet," he included. "Obviously that's not going to happen on the first day."
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23 May 2018
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