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UK sports betting companies 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 firms as sports betting wagering starts to spread in America.
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From Tuesday, new guidelines on wagering came into result 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 very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting wagering.

The market sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads research at Davy.
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For UK companies, which are facing consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.

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

"It's something that we're actually concentrating on, but similarly we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.

'Take time'

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

Firms are hoping to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of 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 in fact legalise sports betting wagering, leaving that concern to local lawmakers.

That is expected to result in considerable variation in how firms get licensed, where sports betting wagering can occur, and which events are open to speculation - with big implications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn each year depending on factors like the number 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 big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are taking a look 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'."
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'Remains to be seen"

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

But bookies face a far different landscape in America than they do in the UK, where sports betting stores are a regular sight.

US laws restricted gaming largely 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 linked to a 1919 baseball World Series match-fixing scandal.

States have actually also been slow to legalise many types of online gaming, despite a 2011 Justice Department viewpoint that appeared to remove obstacles.

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

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

Now an expert, he states UK companies must approach the market carefully, selecting partners with caution and avoiding errors that could lead to regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to gather a percentage of income as an "stability charge".

International companies face the included obstacle of an effective existing video gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their turf.

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

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

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

'It will simply depend'

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

The company has actually been investing in the US market because 2011, when it acquired 3 US companies to establish an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has actually invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a family name in Nevada but that's not always the goal all over.

"We certainly mean to have a very considerable brand presence in New Jersey," he said. "In other states, it will just depend on policy 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 happen on the first day."

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