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UK wagering 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 in America.

From Tuesday, brand-new rules on sports betting entered into effect in Delaware, a tiny east coast state about 2 hours from Washington.

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

The changes are the very 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 wagering.

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

For UK firms, which are facing debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly opportune.

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

"It's something that we're truly focusing on, but equally we do not desire to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US dream sports betting site FanDuel.

'Require time'

The US represented about 23% of the $244bn (₤ 182bn) in gaming profits last year, according to a report by Technavio, external published in January.

Firms are intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting.

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

That is anticipated to result in significant variation in how companies get licensed, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn every year depending upon aspects like how numerous states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be big'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe the majority of people ... are taking a look 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, anticipates that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual earnings.

But bookmakers face a far various landscape in America than they carry out in the UK, where wagering shops are a frequent sight.

US laws restricted gambling largely to Native American lands and Nevada's Las Vegas strip up until relatively recently.

In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have also been sluggish to legalise numerous forms of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting wagering is typically seen in its own classification, "it clearly stays to be seen whether it gets the type of momentum individuals think it will," stated 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 arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he states UK companies should approach the market thoroughly, choosing partners with caution and preventing mistakes that might result in regulator backlash.

"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for company," he states. "It truly is reliant on the result of [state] legislation and how the organization operators pursue the chance."

'It will be collaborations'

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

International business deal with the added difficulty of a powerful existing gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

Analysts say UK firms will require to strike collaborations, providing their knowledge and technology in order to make inroads.

They point to SBTech's current announcement 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 everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The business has been purchasing the US market since 2011, when it acquired 3 US firms to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has revealed collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We definitely mean to have an extremely considerable brand existence in New Jersey," he stated. "In other states, it will simply depend upon regulation and possibly who our local partner is."

"The US is going to be the biggest sports betting wagering market on the planet," he included. "Obviously that's not going to take place on the first day."

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