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

5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, brand-new rules on sports betting came into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the first in what might 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 establish 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 opportune.

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But the market states counting on the US stays a risky bet, as UK companies face complicated state-by-state policy and competition from entrenched local interests.

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

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming revenue last year, according to a report by Technavio, external published in January.

Firms are intending to tap into 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.

The ruling discovered the law was an of federal power. But the court it did not actually legalise sports betting, leaving that concern to local legislators.

That is anticipated to cause significant variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the market.

Potential revenue varieties from $4.2 bn to nearly $20bn each year depending upon factors like how lots of states transfer 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 substantial'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think many people ... are taking a look 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 take 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 earnings.

But bookies deal with a far various landscape in America than they perform in the UK, where sports betting shops are a regular sight.

US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have also been sluggish to legalise numerous forms of online sports betting, in spite of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting wagering is typically viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

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

Now a specialist, he says UK companies should approach the market carefully, selecting partners with care and preventing missteps that could cause regulator reaction.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for organization," he says. "It actually depends on the result of [state] legislation and how the business operators pursue the opportunity."
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'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which desire to gather a portion of profits as an "stability cost".

International companies deal with the added challenge of an effective existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to defend their turf.

Analysts say UK firms will require to strike partnerships, providing their knowledge and technology in order to make inroads.

They indicate SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers likely to materialise.
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"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has been investing in the US market because 2011, when it purchased three US companies to establish an existence in Nevada.

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

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

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not necessarily the goal all over.

"We definitely mean to have a really substantial brand name existence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our regional partner is."

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

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