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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

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

From Tuesday, new rules on wagering entered result 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 modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market sees a "once in a generation" chance to develop a brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are facing debt consolidation, increased online competition and tougher rules from UK regulators, the timing is especially opportune.
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But the market states depending on the US remains a dangerous bet, as UK companies deal with complicated state-by-state regulation and competitors from entrenched regional interests.

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

'Require time'

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

Firms are intending to use more of that activity after last month's choice, which a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.

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

That is expected to result in substantial variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential profits varieties from $4.2 bn to practically $20bn every year depending upon elements like how lots of 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 huge'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I believe the majority of people ... are looking 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual revenue.

But bookmakers face a far different landscape in America than they carry out in the UK, where wagering stores are a regular sight.

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip up until relatively recently.
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In the popular creativity, sports betting wagering has long been connected to a 1919 baseball World Series match-fixing scandal.

States have also been slow to legalise many kinds of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is typically viewed in its own classification, "it plainly remains to be seen whether it gets the type of momentum individuals think 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 jailed in the US in 2006 for running an overseas online sportsbook and served jail time.
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Now a specialist, he says UK companies ought to approach the market thoroughly, choosing partners with care and preventing missteps that might cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm unsure whether it is a chance for service," he says. "It actually depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting companies are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which desire to gather a portion of revenue as an "stability cost".

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

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

They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

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

'It will just depend'

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

The business has been buying the US market because 2011, when it bought three US companies to develop a presence in Nevada.

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

It works as threat supervisor 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 household name in Nevada but that's not necessarily the goal all over.

"We certainly mean to have an extremely substantial brand presence in New Jersey," he said. "In other states, it will simply depend on guideline and possibly who our local partner is."

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

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