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UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

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

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

The changes are the very first in what might end up being 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, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK companies, which are coming to grips with combination, increased online competition and harder rules from UK regulators, the timing is particularly suitable.

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But the industry states relying on the US stays a risky bet, as UK business deal with complicated state-by-state guideline and competition from established regional interests.

"It's something that we're really concentrating on, but equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video 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 choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting .
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The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local legislators.

That is expected to result in significant variation in how firms get certified, where sports betting wagering can occur, and which events are open to speculation - with big ramifications for the size of the market.

Potential profits ranges from $4.2 bn to almost $20bn yearly depending upon aspects like how numerous states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I believe many people ... are taking a look 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 take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in annual profits.
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But bookmakers face a far different landscape in America than they perform in the UK, where sports betting shops are a regular sight.
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US laws limited gambling mostly to Native American lands and Nevada's Las Vegas strip till relatively just recently.

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

States have actually likewise been sluggish to legalise lots of types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now an expert, he says UK companies must approach the market carefully, choosing partners with care and preventing errors that could cause regulator backlash.

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

'It will be collaborations'
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As legalisation begins, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which desire to gather a percentage of revenue as an "integrity charge".

International companies deal with the added difficulty of an effective existing video gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to defend their turf.

Analysts say UK companies will need to strike partnerships, offering their proficiency and innovation in order to make inroads.

They point to SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals 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 simply depend'

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

The business has been buying the US market since 2011, when it purchased three US companies to establish an existence in Nevada.

William Hill now utilizes about 450 people in the US and has actually announced partnerships 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 goal all over.

"We definitely plan to have a really considerable brand name existence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

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

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