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UK betting firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on wagering entered into 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 first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

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

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But the industry says counting on the US stays a risky bet, as UK business deal with complicated state-by-state regulation and competition from entrenched local interests.

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

'Take time'

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

Firms are wanting 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.

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.
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That is anticipated to result in considerable variation in how firms get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with huge implications for the size of the market.

Potential income varieties from $4.2 bn to practically $20bn annually depending upon aspects like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual profits.

But bookmakers face a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.

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

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

States have actually likewise been slow to legalise numerous kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is generally seen in its own category, "it plainly remains to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law teacher 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 offshore online sportsbook and served jail time.

Now a specialist, he says UK firms need to approach the marketplace thoroughly, choosing partners with caution and preventing errors that might cause regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of income as an "stability fee".

International business face the added obstacle of a powerful existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to defend their turf.

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

They indicate SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind 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 just depend'

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

The business has been purchasing the US market since 2011, when it bought three US firms to establish a presence in Nevada.

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

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.

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

"We definitely intend to have an extremely considerable brand name existence in New Jersey," he said. "In other states, it will simply depend upon regulation and possibly who our local partner is."

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

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