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UK sports betting companies gamble on US after sports betting wager ruling
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5 June 2018
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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 effect in Delaware, a small east coast state about two hours from Washington.

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

The changes 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 allow sports betting.

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

For UK companies, which are grappling with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

Why the gambling market deals with an unsure future

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But the industry states counting on the US stays a risky bet, as UK companies deal with complicated state-by-state guideline and competitors from entrenched local interests.

"It's something that we're actually focusing on, however similarly we don't desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue in 2015, 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 disallowed 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 wagering, leaving that question to regional lawmakers.

That is expected to cause considerable variation in how companies get accredited, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn every year depending upon elements like how lots of states move to legalise, Oxford Economics estimated in a 2017 research study for the Association.

"There was a lot of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I think a lot of 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 require time'."

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.

US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have likewise been sluggish to legalise lots of types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to eliminate barriers.
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While sports betting wagering is generally viewed in its own category, "it clearly stays to be seen whether it gets the sort of momentum people think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering policy.

David Carruthers is the previous chief executive of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he states UK firms should approach the market carefully, selecting partners with care and avoiding errors that might cause regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a portion of income as an "integrity fee".
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International companies deal with the included obstacle of an effective existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to safeguard their grass.

Analysts state UK companies will require to strike partnerships, providing their expertise and technology in order to make inroads.

They point to SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers 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 realities.

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

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

It works as threat manager for the Delaware Lottery and has actually invested millions alongside a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a family name in Nevada however that's not always the objective all over.

"We definitely plan to have a really considerable brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

"The US is going to be the biggest sports betting wagering market in the world," he added. "Obviously that's not going to occur on day one."

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