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UK wagering companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on sports betting entered into impact in Delaware, a tiny east coast state about 2 hours from Washington.

Neighbouring New Jersey might begin 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 the method for states to enable sports betting.
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The market sees a "when in a generation" opportunity to develop a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with consolidation, increased online competitors and harder rules from UK regulators, the timing is especially opportune.

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But the market says depending on the US stays a risky bet, as UK companies face complex state-by-state guideline and competition from entrenched regional interests.

"It's something that we're actually focusing on, however similarly we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.

'Take time'

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

Firms are hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

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

That is expected to lead to considerable variation in how firms get certified, where sports betting can take place, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential income ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like how lots of states relocate to legalise, Oxford Economics estimated in a 2017 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 specialists KPMG.

Now, he said: "I think many 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 take some time'."

'Remains to be seen"

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

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

US laws minimal gambling mostly to Native American lands and Nevada's Las Vegas strip up until reasonably recently.

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

States have actually also been sluggish to legalise many types of online gaming, in spite of a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting wagering is generally viewed in its own classification, "it clearly remains to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.

David Carruthers is the former president of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he says UK companies ought to approach the market thoroughly, choosing partners with caution and avoiding missteps that could lead to regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm unsure whether it is an opportunity for company," he says. "It really is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'
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As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of revenue as an "stability fee".

International companies face the added challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their turf.

Analysts state UK firms will need to strike partnerships, offering their expertise and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is offering innovation 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 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 been investing in the US market because 2011, when it bought three US firms to establish 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 risk manager for the Delaware Lottery and has invested millions together with a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada however that's not always the objective everywhere.
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"We certainly intend to have an extremely substantial brand existence 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 market on the planet," he added. "Obviously that's not going to take place on the first day."

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