So, because Monday and Tuesdays are essentially my weekends (and I’ve got nothing better to do), I’ve being doing some digging into US gambling laws since many of us on here seem to view the US as the ultimate prize (including myself) for FI. Adam Coles Q&A on twitter has helped fuel this after being asked about expanding is the US. Note I’m not a lawyer by any stretch so if there is anything in here which is wrong, I apologise. I’ll include sources at the bottom. This piece is just meant to be informative and is also quite dry so be warned.
How big is the US sports betting market compared to the UK?
The UK has perhaps the most well-established online sports betting companies anywhere in the world. The total regulated gambling industry produced a gross gambling yield (GGY) of £14.4 billion between April 2018 and March 2019. Of this, £5.3 billion pounds was produced from remote (online) casino, betting and bingo. For comparison the national lottery produced a GGY of £3 billion. As many people know sports betting, with the exception of animal races, hasn’t being allowed in America (with the exception of Nevada) since a 1992 law bars state-authorised gambling. However, that hasn’t stopped American punters from betting, with an estimated $150 billion dollars wagered on Illegal bets every year according to ESPN sports network. Of this $95 billion is spent on the NFL and college football. It’s fair to say that the majority of the rest would be spent on the other so called Big Four American leagues. The NHL, NBA and the MLB, leaving not a lot for our traditional English style football. However legalising it would almost certainly lead to a growth in gambling and traditional football (and the PL) is getting more and more popular.
How has online gambling changed in the US over the last few years?
A lot of people will have heard that online gambling is now legal in the US due to a law change, so what actually happened? In May 2018 the US Supreme Court struck down the 1992 Professional and Amateur Sports Protection Act with a majority 6-3 decision which barred state-authorised sports gambling. The case was bought by the state of New Jersey which has been a trail blazer in allowing sports betting in the US. This has paved the way for states to legalise sports gambling if they wish and due to the tax revenues it could potentially generate, many are. According to Business insider, as many as 11 states have legalised sports betting already (including New York) while another 24 states have pending legislation.
Why did Football index try and buy Atlantic Sport Exchange? And have other UK betting companies bought American companies?
In October it was announced that SporteX had beaten FI for an American competitor Atlantic Sport Exchange in a deal worth over £19 million. Why buy an American company? Essentially buying an American company would allow FI to have a foothold in the American market. It actually appears FI are slow to the party on this. In 2011 William Hill purchased some betting companies in Nevada while Paddy Power Betfair also owns a small US sportsbook operation. When the Supreme Court struck down the Professional and Amateur Sports Protection Act both companies share prices rose considerably (over 10%). I imagine that this is a sort of easy way for UK gambling companies to get gambling licenses for certain states.
So why aren’t FI already operating in the US since many states have already legalised online sports gambling?
In the UK gambling companies are registered and responsible to the Gambling Commission, they don’t even have to be registered in the UK. One license from the Gambling Commission covers the entirety of the UK, all 65 million people. This is the major hurdle I think for UK betting companies in the US. There is no equivalent of a US wide regulator at a Federal level covering the entirety of the US. Instead gambling laws are devolved to a state level and that means that each state has different rules and regulations. Different sports being allowed to bet on, different licencing schemes and different tax rates. All this makes it a bit of a quagmire at the moment. Another problem this entails is that would a state as big and powerful say New York allow FI to operate in its jurisdiction while moving its punters money to another state or even across the Atlantic? For a relatively small company like FI I imagine it would take time and money to gain the rights to operate in each US state and I’m unsure if US states will allow FI to take money wagered in their states outside of it as the likes of New Zealand, Canada and Ireland allow. Also, British companies are essentially playing away from home here, US states are almost certainly going to focus on giving licenses to US companies who employ people in their states rather than a company thousands of miles away.
Any other hurdles?
One thing that continually popped up was the Wire Act of 1961. The purpose of this act was to prevent organised crime running gambling rings via telephone and other communication lines (which now includes the internet) and is still enforced. Since the act was produced before the internet was even around it was argued that the act shouldn’t apply to online gambling and in 2011 the Obama administration agreed however this was reversed in 2018 by the Trump administration. This legal mire is leading to betting companies being cautious according to business insiders. As far as I can tell some US states are currently challenging this law and it could end up going to the supreme court.
What are gambling laws in other countries FI operate in?
Canada: Gambling companies must be licenced by the government with the law being described as quite clear. There is no need to be based in the country.
Ireland: Online gambling is perfectly legal in Ireland including allowing Irish citizens to gamble through legally licenced offshore sites similar to the UK.
New Zealand: The online gambling legislation is described as refreshingly straightforward; the 2003 Gambling Act specifically states its legal for New Zealanders to use gambling sites located overseas
Basically compared to the US its a lot clearer and decisions are made at a federal level not a state level.