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UK sports betting firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new guidelines on wagering entered into effect in Delaware, a small 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 very first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market sees a "as soon as in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially appropriate.

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But the industry states depending on the US stays a risky bet, as UK business face complicated state-by-state regulation and competitors from entrenched regional interests.

"It's something that we're truly concentrating on, however equally we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.

'Take some time'

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

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

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

That is expected to cause substantial variation in how firms get licensed, where sports betting can occur, and which occasions are open to speculation - with big implications for the size of the marketplace.
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Potential income ranges from $4.2 bn to practically $20bn each year depending on aspects like how numerous states move to legalise, Oxford Economics approximated 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 specialists KPMG.

Now, he said: "I think the majority of people ... are taking a look 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, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual profits.

But bookies face a far various landscape in America than they perform in the UK, where wagering stores are a frequent sight.

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

In the popular imagination, sports betting has long been connected to a 1919 baseball World Series match-fixing scandal.
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States have actually likewise been sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate obstacles.

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

David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK companies need to approach the marketplace thoroughly, picking partners with caution and preventing mistakes that might lead to regulator reaction.
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"This is a chance for the American sports betting gambler ... I'm not exactly sure whether it is a chance for business," he states. "It really is dependent on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to gather a portion of earnings as an "integrity fee".

International companies face the added difficulty of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to protect their grass.

Analysts state UK companies will need to strike collaborations, providing their expertise and innovation in order to make inroads.

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

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

The company has been investing in the US market given that 2011, when it bought 3 US companies to establish a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually announced collaborations with casinos in Iowa and New Jersey.
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It works as threat manager for the Delaware Lottery and has actually invested millions alongside a regional developer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually ended up being a home name in Nevada however that's not always the objective all over.

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

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

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