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UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

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

From Tuesday, brand-new guidelines on sports betting entered into impact in Delaware, a tiny east coast state about 2 hours from Washington.

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

The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.
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The industry sees a "once in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

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

Why the gambling market faces an unsure future

How does unlawful sports betting work and what are the fears?

But the market says counting on the US stays a risky bet, as UK companies face complex state-by-state guideline and competitors from entrenched regional interests.

"It's something that we're actually focusing on, however similarly we do not wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site 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 wishing to use 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.

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 question to regional lawmakers.

That is anticipated to lead to substantial variation in how firms get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with huge ramifications for the size of the marketplace.
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Potential revenue varieties from $4.2 bn to practically $20bn yearly depending upon aspects like how lots of states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think many individuals ... are taking a look 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 some 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 yearly profits.

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

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

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

States have also been sluggish to legalise lots of forms of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is typically seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the former chief executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now a specialist, he states UK firms ought to approach the market carefully, choosing partners with caution and preventing bad moves that might cause regulator reaction.

"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is an opportunity for business," he states. "It truly is dependent on the outcome of [state] legislation and how the service operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a percentage of income as an "integrity cost".

International companies face the included obstacle of a powerful existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to safeguard their turf.

Analysts say UK firms will require to strike collaborations, providing their know-how and innovation in order to make inroads.
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They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers likely to materialise.

"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just 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 purchased 3 US companies to develop a presence in Nevada.

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

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

Mr Asher stated William Hill has become a family name in Nevada but that's not always the goal all over.

"We definitely plan to have a very substantial brand name presence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our local partner is."

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

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