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

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, brand-new rules on sports betting entered impact in Delaware, a coast state about two hours from Washington.

Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

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

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

For UK firms, which are facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

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But the market states depending on the US stays a risky bet, as UK companies face complex state-by-state guideline and competitors from established regional interests.

"It's something that we're truly focusing on, but similarly we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are hoping to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting wagering.
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The ruling 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 local legislators.

That is anticipated to cause substantial variation in how firms get certified, where sports betting wagering can take place, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential earnings varieties from $4.2 bn to practically $20bn each year depending upon aspects like the number of states move to legalise, Oxford Economics estimated in a 2017 research 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 experts KPMG.

Now, he stated: "I believe a lot of people ... are looking 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 form by 2023, producing a market with about $6bn in yearly revenue.

But bookies deal with a far different landscape in America than they carry out in the UK, where wagering shops are a frequent sight.
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US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

States have also been slow to legalise numerous forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove barriers.

While sports betting is normally seen in its own category, "it plainly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK companies must approach the marketplace carefully, choosing partners with caution and preventing mistakes that might result in regulator backlash.

"This is a chance for the American sports betting bettor ... I'm uncertain whether it is an opportunity for business," he states. "It really depends on the outcome of [state] legislation and how the organization operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a percentage of income as an "integrity fee".

International business face the included challenge of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.

Analysts state UK companies will need to strike collaborations, providing their competence and technology in order to make inroads.

They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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 stated.

'It will just depend'

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

The business has been investing in the US market considering that 2011, when it purchased 3 US firms to develop an existence 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 manager for the Delaware Lottery and has invested millions together with a local developer 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 certainly intend to have a really substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon policy and potentially who our regional partner is."

"The US is going to be the greatest sports betting wagering market worldwide," he included. "Obviously that's not going to occur on the first day."

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