British bookmakers are increasingly training their focus on the US sports betting market as legalization spreads like wildfire across the country.
The US Supreme Court struck down PASPA, a federal ban that outlawed sports wagering in every state apart from Nevada, in May 2018. Since then Delaware, New Jersey, Mississippi, West Virginia, Pennsylvania, Rhode Island, Arkansas, New York, Iowa, Indiana, New Mexico, and Oregon have rolled out legal sports betting, while launches are pending in five more states. It has led to a scramble to introduce the best online sportsbooks in each state, and British bookies are piling in.
William Hill was already the largest sports betting operator in Nevada, so it had a significant early advantage. It has taken on state monopolies in Delaware and Rhode Island since PASPA came crashing down, and it is present in most states that have legalized sports betting. However, a European rival looks set to emerge as the dominant player in this lucrative sector.
Dublin-headquartered Paddy Power Betfair made the shrewd decision to purchase daily fantasy sports provider FanDuel after PASPA was axed. FanDuel and its key rival, DraftKings, rose to prominence by offering a watered-down version of wagering – staking money on daily fantasy sports draft games – while sports betting was outlawed. Both firms spent large amounts of money on advertising in a bid to outdo one another, so they were both household names by the time sports betting was permitted and DFS dwindled in popularity.
DraftKings also capitalized on the decision to strike down PASPA by quickly getting into the sports betting vertical. It launched the first sportsbook in New Jersey, which has gone on to overtake Nevada as the most lucrative sports betting market in America, and it became an instant success. However, Paddy Power Betfair used the FanDuel brand to front its U.S. sports betting operations and it quickly blew DraftKings out of the water.
FanDuel is now the number one operator in the Garden State, with DraftKings second and William Hill a fair way in the third. Paddy Power Betfair has since rebranded as Flutter Entertainment, and it is in the process of acquiring Canadian sports betting giant The Stars Group, which owns Sky Bet in the UK, as well as huge North American brands like PokerStars and FOX Bet. UK Competition Commission concerns could actually end up thwarting its US ambitions, as owning Paddy Power, Betfair and Sky Bet could mean it has too great a share of the British market.
Some commentators have even suggested it might have to sell off Paddy Power, the parent brand, in order to push the deal through. It might not be the worst idea, as the US is a huge prize, and the UK brick and mortar betting shop sector is crumbling after the government reduced the maximum stake on Fixed Odds Betting Terminals from £100 to just £2.
That has inspired William Hill to significantly ramp up its focus on the US, while Bet365 and Ladbrokes Coral owner GVC are also making forays into the American market, as is Warrington-based Betfred. The combination of Paddy Power’s expertise in sports betting and the FanDuel brand proved to be a winning combination, and more Anglo-American partnerships could be tied up.
Yet there are concerns that high tax means it will require a lot of effort for very little reward. Pennsylvania, for instance, has the potential to overtake New Jersey as the largest state for sports betting due to its population and number of sports teams, but it charges a 36% revenue tax for sportsbooks, along with a $10 million licensing fee. Other states have complained that the tax they have received has not provided the silver bullet they need to plug gaps in their budgets.
However, it is worth noting that most states charge far more sensible tax rates than Pennsylvania, and this industry is still very much in its infancy. Increasing numbers of Americans are being lured away from the black market to legal, regulated sportsbooks, and handle and revenue figures should soar in the years ahead. British bookmakers have the experience and expertise to be at the forefront of the trend, and if they can secure more lucrative partnerships with American operators it could more than makeup for any struggles on the UK high street.