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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

It's high stakes for UK companies as sports betting starts to spread out in America.
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From Tuesday, brand-new rules on sports betting entered into effect in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey could begin 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 last month cleared the method for states to enable sports betting.

The industry sees a "once in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing combination, increased online competition and tougher guidelines from UK regulators, the timing is particularly appropriate.
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But the market says depending on the US remains a risky bet, as UK companies face complicated state-by-state regulation and competitors from established regional interests.

"It's something that we're actually concentrating on, however equally we don't desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take time'

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

Firms are wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
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The ruling found the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional legislators.

That is anticipated to cause significant variation in how companies get accredited, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the market.

Potential revenue varieties from $4.2 bn to nearly $20bn each year depending on elements like how lots of states relocate to legalise, Oxford Economics approximated 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 experts KPMG.

Now, he said: "I think most people ... are looking 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 some time'."
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'Remains to be seen"

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

But bookmakers deal with a far different landscape in America than they do 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 till relatively recently.

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

States have actually also been slow to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting is usually viewed in its own category, "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 apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he says UK companies should approach the market carefully, selecting partners with caution and preventing missteps that could result in regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is an opportunity for organization," he states. "It really depends on the result of [state] legislation and how the service operators pursue the chance."

'It will be collaborations'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to collect a percentage of income as an "integrity charge".

International companies face the included challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to safeguard their grass.
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Analysts say UK firms will require to strike partnerships, offering their expertise and innovation in order to make inroads.

They indicate SBTech's current statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

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

'It will just depend'

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

The business has actually been investing in the US market given that 2011, when it bought 3 US companies to develop a presence in Nevada.

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

It works as threat manager for the Delaware Lottery and has invested millions along with a regional designer in a New Jersey horse racing track.

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

"We definitely intend to have a really considerable brand name presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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