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UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on sports betting came into impact in Delaware, a tiny east coast state about two hours from Washington.

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

The changes 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.

The industry sees a "as soon as in a generation" opportunity to establish a 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 facing combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.

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But the industry says depending on the US remains a risky bet, as UK companies deal with complex state-by-state policy and competitors from entrenched regional interests.

"It's something that we're really focusing on, but equally we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently acquired 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 published in January.

Firms are hoping to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.

The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that to regional lawmakers.

That is expected to cause considerable variation in how companies get licensed, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn every year depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for specialists KPMG.
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Now, he stated: "I think most individuals ... 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 require time'."

'Remains to be seen"

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

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

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have actually likewise been sluggish to legalise numerous forms of online gambling, regardless of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting wagering is typically seen in its own classification, "it clearly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering guideline.

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 need to approach the market thoroughly, selecting partners with caution and avoiding mistakes that could result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm not sure whether it is an opportunity for company," he says. "It actually is reliant on the outcome of [state] legislation and how the company operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which want to gather a portion of revenue as an "stability cost".

International business deal with the included difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their turf.

Analysts say UK firms will need to strike collaborations, providing their know-how and innovation in order to make inroads.

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

"It will be a win-win for everybody, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has been buying the US market considering that 2011, when it bought three US firms to establish a presence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed collaborations 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 said William Hill has ended up being a household name in Nevada but that's not always the objective all over.

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

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

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