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UK wagering companies gamble 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 companies as sports betting starts to spread out in America.

From Tuesday, brand-new rules on betting came into result in Delaware, a tiny 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 could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing combination, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.
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But the industry says relying on the US remains a dangerous bet, as UK business deal with complex state-by-state policy and competitors from entrenched local interests.

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

'Take time'

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

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

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to local legislators.
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That is anticipated to cause considerable variation in how companies get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to almost $20bn annually depending on elements like how many states relocate to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I think the majority of individuals ... are looking 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 require time'."

'Remains to be seen"

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

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

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

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

States have actually also been slow to legalise many kinds of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting wagering is normally seen 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 regulation.

David Carruthers is the previous 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 firms should approach the marketplace carefully, selecting partners with caution and preventing errors that could lead to regulator reaction.

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

'It will be collaborations'

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

International companies face the added difficulty of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to defend their turf.

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

They point to SBTech's current announcement that it is providing 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 stated.

'It will simply depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
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The company has been purchasing the US market considering that 2011, when it purchased three US firms to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.

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

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

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

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

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