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

5 June 2018
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By Natalie Sherman

Business reporter, New York

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

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

Neighbouring New Jersey could 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 permit sports betting wagering.

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

For UK firms, which are facing consolidation, 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 risky bet, as UK business face complex 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," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Require 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 wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to local lawmakers.

That is anticipated to result in considerable variation in how companies get accredited, where sports betting wagering can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to almost $20bn every year depending upon elements like how lots of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe the majority of individuals ... are looking 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, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly revenue.

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

US laws minimal gaming largely to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have likewise been sluggish to legalise lots of kinds of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is usually seen in its own category, "it plainly stays 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 regulation.
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David Carruthers is the previous primary executive of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served prison time.
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Now a specialist, he states UK firms need to approach the marketplace carefully, selecting partners with care and avoiding bad moves that could cause regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for company," he says. "It really depends on the result of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to collect a portion of profits as an "stability charge".

International business deal with the added difficulty of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American tribes that are looking for to defend their grass.

Analysts say UK companies will need to strike partnerships, offering their know-how and technology in order to make inroads.

They indicate SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everybody, 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 actually been investing in the US market since 2011, when it purchased three US companies to develop a presence in Nevada.

William Hill now uses about 450 people in the US and has announced partnerships with casinos in Iowa and New Jersey.

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

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

"We definitely plan to have a really significant brand presence in New Jersey," he stated. "In other states, it will simply depend on policy and potentially who our regional partner is."
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"The US is going to be the most significant sports betting wagering market on the planet," he included. "Obviously that's not going to happen on day one."

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