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UK sports betting companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York
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It's high stakes for UK companies as sports betting starts to spread out in America.

From Tuesday, new guidelines on wagering entered result 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 end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The market sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, said Dublin-based monetary Jennings, who heads leisure research at Davy.

For UK firms, which are coming to grips with debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly appropriate.
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But the market says relying on the US remains a risky bet, as UK business deal with complicated state-by-state regulation and competition from established regional interests.
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"It's something that we're truly concentrating on, however equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting site FanDuel.
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'Take some time'

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

Firms are intending to take advantage of 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 ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that question to regional legislators.

That is anticipated to cause significant variation in how companies get licensed, where sports betting can happen, and which events are open to speculation - with big ramifications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn yearly depending on elements like how lots of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I believe the majority of people ... are looking at this as, 'it's an opportunity however 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, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in annual revenue.

But bookies face a far different landscape in America than they carry out in the UK, where wagering shops are a frequent sight.

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

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

States have likewise been sluggish to legalise lots of kinds of online gaming, in spite of a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting is typically seen in its own classification, "it clearly remains to be seen whether it gets the type of momentum people think it will," said 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 apprehended in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he says UK companies need to approach the market carefully, choosing partners with caution and avoiding errors that might lead to regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which want to collect a portion of earnings as an "integrity fee".

International companies deal with the added obstacle of an effective existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to protect their grass.

Analysts state UK companies will require to strike partnerships, providing their know-how and innovation in order to make inroads.

They point to SBTech's recent 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, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The business has been investing in the US market given that 2011, when it acquired three US companies to develop a presence in Nevada.

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

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

Mr Asher said William Hill has ended up being a household name in Nevada but that's not always the goal all over.

"We certainly mean to have a really substantial brand name existence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."

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

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