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UK sports betting firms 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 companies as sports betting wagering starts to spread out in America.

From Tuesday, new rules on wagering entered into result in Delaware, a tiny east coast state about two hours from Washington.

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

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

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

For UK firms, which are coming to grips with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially appropriate.

Why the sports betting industry faces an unsure future

How does prohibited sports betting wagering work and what are the fears?

But the industry says relying on the US stays a risky bet, as UK business face complex state-by-state regulation and competition from established regional interests.

"It's something that we're actually focusing on, but similarly we don't desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought 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 last year, according to a report by Technavio, external released in January.

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

The ruling discovered 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 companies get licensed, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential revenue varieties from $4.2 bn to practically $20bn yearly depending on elements like how numerous states transfer 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 substantial'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think the majority of people ... are looking at this as, 'it's a chance 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, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in annual revenue.

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

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

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

States have actually likewise been sluggish to legalise numerous forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to get rid of challenges.

While sports betting wagering is generally seen in its own classification, "it plainly stays to be seen whether it gets the type of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the previous president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served jail time.

Now an expert, he says UK companies ought to approach the market thoroughly, picking partners with care and avoiding mistakes that could lead to regulator backlash.

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

'It will be collaborations'

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

International companies deal with the added challenge of an effective existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to defend their turf.

Analysts state UK companies will need to strike partnerships, using their know-how and technology in order to make inroads.

They indicate SBTech's recent announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind 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 said.

'It will simply depend'

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

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

William Hill now uses about 450 individuals in the US and has actually announced partnerships 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 developer in a New Jersey horse racing track.

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

"We definitely mean to have a very considerable brand name existence in New Jersey," he said. "In other states, it will simply depend on policy and possibly who our regional partner is."
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"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to happen on the first day."

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