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UK wagering companies bet on US after sports betting wager judgment
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5 June 2018
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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, new guidelines on sports betting entered result in Delaware, a tiny east coast state about two hours from Washington.

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

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

The industry sees a "as soon as in a generation" chance to establish a brand-new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

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But the market says counting on the US remains a dangerous bet, as UK business deal with complex state-by-state regulation and competition from established local interests.

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

'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 published in January.

Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond 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 actually legalise sports betting, leaving that concern to regional lawmakers.

That is expected to cause substantial variation in how companies get accredited, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to almost $20bn every year depending upon factors like how many states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I believe a lot of individuals ... are looking at this as, 'it's an opportunity 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual profits.

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

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have actually likewise been sluggish to legalise many forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

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

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

Now a specialist, he states UK firms need to approach the market carefully, picking partners with care and avoiding mistakes that might result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for business," he says. "It truly is dependent on the result of [state] legislation and how the company operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity charge".

International companies face the included difficulty of a powerful existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to defend their grass.

Analysts say UK companies will need to strike collaborations, offering their know-how and technology in order to make inroads.

They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

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

'It will just depend'

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

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

William Hill now employs about 450 people in the US and has actually announced partnerships with gambling establishments in Iowa and New Jersey.

It works as danger supervisor for the Delaware Lottery and has invested millions together with a local designer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually ended up being a household name in Nevada but that's not necessarily the objective everywhere.
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"We definitely intend to have a really significant brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our regional partner is."

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

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