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firms gamble on US after sports betting wager ruling

5 June 2018

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

From Tuesday, new rules on sports betting came into impact in Delaware, a tiny east coast state about 2 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 way for states to allow sports betting.
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The market sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are facing combination, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.

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But the industry states depending on the US stays a dangerous bet, as UK companies face complicated state-by-state policy and competitors from established regional interests.

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

'Take some time'

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

Firms are wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is anticipated to lead to considerable variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential income varieties from $4.2 bn to practically $20bn annually depending on factors like the number of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe the majority of people ... are looking at this as, 'it's a chance but 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, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in annual income.

But bookmakers deal with a far different landscape in America than they carry out in the UK, where wagering stores are a frequent sight.

US laws limited betting largely to Native American lands and Nevada's Las Vegas strip till 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 actually likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is usually seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the previous primary executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now a specialist, he says UK companies must approach the market carefully, picking partners with care and avoiding missteps that could result in regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to gather a portion of revenue as an "stability fee".
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International business face the included obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their turf.

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

They point to SBTech's recent announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has been investing in the US market because 2011, when it acquired 3 US firms to establish an existence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions alongside a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a household name in Nevada but that's not necessarily the objective everywhere.

"We definitely mean to have a very substantial brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our local partner is."

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

US ruling opens method for sports betting