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UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

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

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

For UK firms, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially .

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But the industry states depending on the US remains a risky bet, as UK business deal with complex state-by-state regulation and competition from entrenched local interests.

"It's something that we're truly concentrating on, however equally we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently acquired the US fantasy sports betting website FanDuel.

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

Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting.

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

That is expected to result in considerable variation in how companies get accredited, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to nearly $20bn each year depending on aspects 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 substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many 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 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, creating a market with about $6bn in yearly profits.

But bookies face a far various landscape in America than they perform in the UK, where wagering stores are a frequent sight.

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have also been sluggish to legalise numerous types of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of obstacles.
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While sports betting is normally seen in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting wagering guideline.

David Carruthers is the former chief executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a specialist, he says UK companies ought to approach the market carefully, choosing partners with caution and avoiding bad moves that could cause regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for organization," he states. "It truly is reliant on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'
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As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to collect a portion of earnings as an "stability cost".

International companies face the added difficulty of an effective existing gaming market, with casino operators, state-run lotteries and Native American tribes that are seeking to defend their grass.

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

They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers likely to materialise.
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"It will be a win-win for everybody, however 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 realities.

The business has actually been investing in the US market because 2011, when it purchased three US companies to establish a presence in Nevada.

William Hill now utilizes 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 alongside a local developer in a New Jersey horse racing track.

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

"We definitely plan to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our regional partner is."

"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to take place on day one."

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