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UK wagering firms gamble on US after sports betting wager ruling
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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, brand-new rules on sports betting entered into result in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.
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The market sees a "when in a generation" opportunity 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 competitors and harder guidelines from UK regulators, the timing is especially suitable.

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But the industry states counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competition from established local interests.

"It's something that we're truly focusing on, however equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.
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'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming profits in 2015, according to a report by Technavio, external published in January.

Firms are wanting 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 couple of others from authorising sports betting wagering.

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

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

Potential revenue varieties from $4.2 bn to nearly $20bn yearly depending on elements like how numerous states transfer 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 specialists KPMG.
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Now, he said: "I believe the majority of people ... are taking a look at this as, 'it's a chance however it's not going to be $20bn and it's going to be state by state and it's going to take time'."

'Remains to be seen"

Chris Grove, managing 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 bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a frequent sight.

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably 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 likewise been sluggish to legalise numerous kinds of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting wagering is normally viewed in its own category, "it plainly remains to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

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

Now an expert, he states UK firms need to approach the marketplace carefully, picking partners with caution and avoiding mistakes that might cause regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a portion of revenue as an "integrity fee".

International companies deal with the added difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to protect their turf.
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Analysts state UK firms will need to strike collaborations, offering their expertise and technology in order to make inroads.

They point to SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

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

'It will just depend'

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

The company has been buying the US market since 2011, when it acquired 3 US companies to establish a presence in Nevada.

William Hill now employs about 450 individuals in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions together with 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 but that's not always the goal everywhere.

"We definitely plan to have an extremely significant brand name existence in New Jersey," he said. "In other states, it will just depend upon guideline and potentially who our local partner is."

"The US is going to be the most significant sports betting market in the world," he added. "Obviously that's not going to take place on the first day."
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More on this story

US ruling opens method for sports betting

14 May 2018

Paddy Power purchases fantasy sports betting website

23 May 2018