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

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

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

The changes are the very first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

The industry sees a "once 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 at Davy.

For UK companies, which are grappling with combination, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

Why the gaming industry deals with an unsure future

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But the industry states counting on the US stays a risky bet, as UK companies face complicated state-by-state guideline and competition from established local interests.

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

'Require time'
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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 overruled a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

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

That is anticipated to lead to considerable variation in how companies get accredited, where sports betting can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to practically $20bn annually depending upon factors like the number of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a great deal of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think many 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 take time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly income.

But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

US laws restricted gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have actually also been sluggish to legalise many types of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting wagering is usually viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.
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David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a specialist, he says UK firms must approach the marketplace thoroughly, choosing partners with caution and avoiding errors that could cause regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of earnings as an "stability charge".

International business deal with the added difficulty of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

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

They point to SBTech's current statement that it is supplying innovation 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 everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The business has actually been investing in the US market since 2011, when it bought 3 US firms to develop an existence in Nevada.

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

It works as risk 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 home name in Nevada however that's not necessarily the goal everywhere.

"We certainly plan to have a really considerable brand presence in New Jersey," he stated. "In other states, it will just depend on guideline and potentially who our regional partner is."

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

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