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UK sports betting companies 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 companies as sports betting wagering starts to spread out in America.

From Tuesday, new guidelines on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.
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Neighbouring New Jersey could start accepting sports betting bets as early as Friday.

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
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The industry sees a "once in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

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

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But the market states relying on the US remains a dangerous bet, as UK companies face complicated state-by-state policy and competitors from entrenched regional interests.

"It's something that we're actually concentrating on, but equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings last year, according to a report by Technavio, external released in January.
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Firms are wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.

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 local lawmakers.

That is expected to result in considerable 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 marketplace.

Potential revenue varieties from $4.2 bn to practically $20bn every year depending on elements like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe many people ... are looking 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 require time'."
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'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, developing a market with about $6bn in yearly profits.

But bookmakers face a far various landscape in America than they perform in the UK, where sports betting stores are a regular sight.

US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip up until fairly recently.

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

States have likewise been slow to legalise many types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove barriers.

While sports betting wagering is normally viewed in its own classification, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.

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

Now a consultant, he says UK firms need to approach the marketplace thoroughly, selecting partners with caution and preventing mistakes that might lead to regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for company," he says. "It truly is dependent 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 fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity charge".

International business face the included obstacle of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are looking for to protect their turf.

Analysts say UK firms will need to strike collaborations, offering their expertise and technology in order to make inroads.

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

"It will be a win-win for everyone, however it will be and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.

The company has been buying the US market given that 2011, when it purchased 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We certainly intend to have a really considerable brand existence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our regional partner is."

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

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