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UK Betting Firms Gamble on United States After Sports Wager Ruling

UK wagering companies bet on US after sports betting wager judgment

5 June 2018

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 wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The market sees a "when in a generation" chance to establish a new market in sports betting-mad America, stated Dublin-based David Jennings, who heads leisure research study at Davy.

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

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But the market says counting on the US remains a dangerous bet, as UK companies face complex state-by-state guideline and competition from established local interests.

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

'Require time'

The US accounted for 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 wishing to use more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.

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

That is expected to lead to substantial variation in how companies get certified, where sports betting wagering can happen, and which occasions are open to speculation - with huge ramifications for the size of the market.

Potential revenue ranges from $4.2 bn to nearly $20bn annually depending on factors like how many states transfer to legalise, Oxford Economics approximated in a 2017 study for the American Gaming Association.

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

Now, he stated: "I believe the majority of individuals ... are looking 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 take time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in annual earnings.

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 mainly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have also been slow to legalise many types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is generally viewed in its own classification, "it clearly remains to be seen whether it gets the type of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

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

Now a consultant, he states UK firms must approach the market thoroughly, choosing partners with caution and preventing errors that might lead to regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for business," he states. "It really is reliant on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to gather a percentage of earnings as an "integrity fee".

International business face the added obstacle of an effective existing video gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to safeguard their grass.

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

They point to SBTech's current statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most likely to materialise.

"It will be a win-win for everyone, however it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The company has been investing in the US market since 2011, when it acquired 3 US companies to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has ended up being a household name in Nevada however that's not always the objective all over.

"We definitely intend to have an extremely significant brand presence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our regional partner is."

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

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