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UK sports betting firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting entered impact 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 modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

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

For UK firms, which are facing debt consolidation, increased online competition and harder rules from UK regulators, the timing is particularly appropriate.

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But the market states depending on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're actually concentrating on, but equally we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in gaming profits in 2015, according to a report by Technavio, external published in January.

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

The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional lawmakers.

That is expected to result in significant variation in how companies get certified, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn every year depending upon aspects like the number of states move to legalise, Oxford Economics in a 2017 study for the American Gaming Association.

"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think most individuals ... 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 take time'."

'Remains to be seen"

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

But bookmakers face a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.
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In the popular imagination, sports betting wagering has actually long been linked to a 1919 baseball World Series match-fixing scandal.

States have likewise been slow to legalise numerous types of online gambling, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting wagering is normally viewed in its own category, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," said 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 jail time.

Now a consultant, he states UK firms need to approach the market carefully, selecting partners with caution and preventing bad moves that might result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for organization," he says. "It truly is dependent on the result of [state] legislation and how the company operators pursue the opportunity."

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to gather a portion of revenue as an "stability charge".

International business deal with the added challenge of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to defend their turf.

Analysts state UK companies will require to strike partnerships, using their proficiency and innovation in order to make inroads.

They indicate SBTech's current announcement that it is offering 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 innovation," Mr Hawkley said.

'It will just depend'

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

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

William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

It works as danger 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 actually ended up being a household name in Nevada however that's not always the objective all over.

"We definitely plan to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our local partner is."

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

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