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

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new guidelines on wagering entered into result 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.

The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The industry sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder rules from UK regulators, the timing is especially suitable.

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But the market says relying on the US stays a dangerous bet, as UK business face complicated state-by-state policy and competitors from entrenched local interests.

"It's something that we're truly concentrating on, but equally we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.
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'Require time'

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

Firms are wanting to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting .

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

That is expected to result in substantial variation in how companies get licensed, where sports betting can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential profits varieties from $4.2 bn to practically $20bn every year depending upon elements like how many 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 big'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe a lot of 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'."

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have also been slow to legalise lots of forms of online gaming, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting wagering is generally seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the previous primary executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he says UK companies should approach the marketplace thoroughly, selecting partners with caution and preventing errors that might lead to regulator backlash.

"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for organization," he states. "It actually is dependent 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 fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity cost".

International business face the added challenge of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

Analysts say UK companies will need to strike partnerships, providing their knowledge and technology 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 kind of deals most likely to materialise.

"It will be a win-win for everybody, but it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The business has been purchasing the US market given that 2011, when it acquired 3 US companies to establish a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has ended up being a family name in Nevada but that's not always the goal all over.

"We definitely intend to have a very substantial brand existence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

"The US is going to be the most significant sports betting wagering market on the planet," he added. "Obviously that's not going to occur on day one."

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