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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on sports betting entered effect in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin 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.
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The industry sees a "as soon as in a generation" chance to develop a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

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But the says relying on the US remains a risky bet, as UK companies face complicated state-by-state guideline and competitors from established local interests.

"It's something that we're truly concentrating on, however similarly we do not want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take 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.
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Firms are intending to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

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

That is anticipated to lead to considerable variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential income ranges from $4.2 bn to practically $20bn every year depending on aspects 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 big'", stated Will Hawkley, London-based head of leisure for specialists 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in yearly income.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering shops are a frequent sight.

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have actually also been slow to legalise many kinds of online gambling, despite a 2011 Justice Department opinion that appeared to remove barriers.

While sports betting is generally seen in its own category, "it clearly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law teacher 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 jail time.

Now a consultant, he states UK companies ought to approach the market carefully, picking partners with caution and preventing mistakes that could cause regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which desire to gather a portion of earnings as an "integrity fee".

International companies face the included obstacle of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to defend their turf.

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

They point to SBTech's recent statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everyone, but it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The company has actually been investing in the US market considering that 2011, when it purchased three US firms to develop a presence in Nevada.

William Hill now employs about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager 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 actually ended up being a home name in Nevada however that's not necessarily the goal all over.
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"We definitely intend to have a really substantial brand name existence in New Jersey," he said. "In other states, it will simply depend upon guideline and potentially who our local partner is."

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

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