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UK sports betting firms bet on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on betting came into result in Delaware, a small east coast state about 2 hours from Washington.

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The industry sees a "once in a generation" chance to develop a brand-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 facing debt consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.

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But the industry says relying on the US remains a dangerous bet, as UK companies face complex state-by-state policy and competition from established local interests.

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

'Take time'

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

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

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

That is to result in substantial variation in how companies get certified, where sports betting can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential profits varieties from $4.2 bn to nearly $20bn every year depending upon 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 substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think many individuals ... are taking a look at this as, 'it's a chance 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'."

'Remains to be seen"

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

But bookmakers face a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

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

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

States have actually also been sluggish to legalise lots of types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to remove obstacles.

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

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

Now an expert, he says UK firms should approach the market carefully, choosing partners with caution and avoiding mistakes that might lead to regulator backlash.

"This is a chance for the American sports betting gambler ... I'm uncertain whether it is a chance for service," he says. "It truly depends on the result of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to collect a portion of revenue as an "integrity fee".

International business face the included difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.

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

They point to SBTech's recent statement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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 said.

'It will simply depend'

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

The business has been purchasing the US market considering that 2011, when it bought 3 US companies to establish an existence in Nevada.

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

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

Mr Asher stated William Hill has actually become a home name in Nevada however that's not always the goal everywhere.

"We certainly mean to have a really significant brand name existence in New Jersey," he stated. "In other states, it will simply depend upon policy and possibly who our regional 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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