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

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 impact in Delaware, a small east coast state about two hours from Washington.
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Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.

The modifications are the very 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 wagering.
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The market sees a "as soon as in a generation" opportunity to develop a 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 grappling with debt consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry says counting on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competitors from established regional interests.

"It's something that we're truly concentrating on, but similarly we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Take some 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 released in January.

Firms are intending 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 wagering.

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that question to local lawmakers.

That is anticipated to lead to considerable variation in how companies get licensed, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn yearly depending upon elements like how lots of states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

"There was a great deal 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 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 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, developing a market with about $6bn in yearly revenue.

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

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip till reasonably recently.
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In the popular imagination, sports betting has long been linked to a 1919 baseball World Series match-fixing scandal.

States have actually also been sluggish to legalise lots of types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

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

David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he says UK companies ought to approach the marketplace carefully, selecting partners with care and avoiding errors that could lead to regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for organization," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which wish to gather a portion of income as an "stability fee".

International companies face the added challenge of an effective existing gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to protect their turf.

Analysts state UK companies will require to strike partnerships, using their proficiency and technology in order to make inroads.

They point to SBTech's recent statement that it is providing 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 everybody, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has been purchasing the US market considering that 2011, when it bought three US companies to develop an existence in Nevada.

William Hill now utilizes about 450 people in the US and has revealed collaborations with casinos in Iowa and New Jersey.

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

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

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

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

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