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UK wagering firms bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

New Jersey might start accepting sports betting bets as early as Friday.

The modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable 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 monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing combination, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.

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But the industry states counting on the US stays a risky bet, as UK business deal with complex state-by-state regulation and competition from entrenched local interests.

"It's something that we're really concentrating on, but equally we don't desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Take time'

The US represented 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 wanting to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to regional legislators.

That is anticipated to result in significant variation in how firms get accredited, where sports betting can take place, and which occasions are open to speculation - with big ramifications for the size of the market.

Potential profits varieties from $4.2 bn to almost $20bn annually depending on aspects like the number of states move 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'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "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, predicts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual earnings.

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering shops are a regular sight.

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have actually likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting is usually seen in its own category, "it clearly remains to be seen whether it gets the type of momentum people believe it will," said 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 arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he states UK companies should approach the market carefully, picking partners with care and avoiding bad moves that could result in regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which desire to gather a portion of earnings as an "integrity fee".

International business face the included difficulty of an effective existing gaming market, with casino operators, state-run lotteries and Native American people that are seeking to safeguard their turf.

Analysts state UK firms will need to strike collaborations, offering their proficiency and technology in order to make inroads.

They indicate SBTech's recent announcement that it is providing 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 everybody, but 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 truths.

The company has actually been buying the US market given that 2011, when it bought three US firms to establish an existence in Nevada.

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

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

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

"We certainly mean to have a really substantial brand name presence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our local partner is."

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

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