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

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new rules on betting entered effect in Delaware, a small east coast state about two hours from Washington.

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

The changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.

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

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

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But the industry says on the US stays a risky bet, as UK business deal with complicated state-by-state regulation and competition from established local interests.

"It's something that we're truly focusing on, however equally we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.

'Require time'

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

Firms are wishing to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local lawmakers.

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

Potential income ranges from $4.2 bn to nearly $20bn yearly depending upon elements like how lots of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe many people ... are taking a look at this as, 'it's an opportunity 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in yearly income.

But bookies face a far various landscape in America than they perform in the UK, where wagering shops are a regular sight.

US laws minimal betting mostly to Native American lands and Nevada's Las Vegas strip till reasonably just recently.

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

States have actually also been sluggish to legalise many forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

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

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

Now an expert, he says UK firms must approach the marketplace carefully, choosing partners with care and avoiding mistakes that might cause regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for organization," he says. "It actually is dependent on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity cost".

International companies face the included difficulty of an effective existing gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to safeguard their turf.

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

They indicate SBTech's recent statement 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 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 realities.

The business has actually been buying the US market given that 2011, when it acquired 3 US companies to establish a presence in Nevada.

William Hill now employs about 450 people in the US and has announced collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has become a family name in Nevada however that's not necessarily the goal all over.
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"We certainly mean to have an extremely considerable brand name existence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our regional partner is."
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"The US is going to be the biggest sports betting wagering market in the world," he included. "Obviously that's not going to take place on day one."

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