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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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 impact in Delaware, a small 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 could become a wave of legalisation after the Supreme Court last month cleared the method 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, said Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is particularly opportune.

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But the market says counting on the US stays a risky bet, as UK companies deal with complicated state-by-state regulation and competitors from established regional interests.

"It's something that we're truly concentrating on, but equally we don't wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.
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'Take some time'

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

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

The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local legislators.

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

Potential income varieties from $4.2 bn to nearly $20bn annually depending on elements like the number of states move 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 huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think the majority 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, developing a market with about $6bn in annual profits.
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But bookmakers face a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.

US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have also been sluggish to legalise many types of online betting, despite a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting is normally seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting 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 specialist, he says UK firms ought to approach the market carefully, picking partners with caution and avoiding errors that might cause regulator reaction.

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

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of income as an "integrity charge".
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International business deal with the included obstacle of a powerful existing video gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

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

They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers 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 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 three US firms to establish an existence in Nevada.

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

It works as risk supervisor for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada however that's not necessarily the objective all over.

"We definitely plan to have a very presence in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our local partner is."

"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to take place on day one."
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