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UK wagering firms gamble on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on wagering entered into effect in Delaware, a small 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 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" chance to develop a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.

Why the deals with an unsure future

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But the market says depending on the US stays a dangerous bet, as UK companies deal with complex state-by-state regulation and competition from entrenched local interests.

"It's something that we're truly focusing on, but similarly we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which recently purchased the US fantasy sports betting website FanDuel.

'Take some time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming income last year, according to a report by Technavio, external published in January.
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Firms are intending to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

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

That is anticipated to lead to considerable variation in how companies get licensed, where sports betting wagering can take place, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to almost $20bn every year depending on factors like how lots of states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think a lot of individuals ... 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 time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in annual income.

But bookies face a far various landscape in America than they perform in the UK, where wagering shops are a regular sight.

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have also been slow to legalise lots of types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting wagering is generally seen in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people think 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 president of BetonSports, who was apprehended in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a consultant, he says UK companies need to approach the marketplace carefully, selecting partners with care and preventing bad moves that could result in regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is an opportunity for organization," he states. "It truly 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 requests by US sports betting leagues, which desire to collect a percentage of earnings as an "stability fee".

International business face the included difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottos and Native American tribes that are looking for to protect their turf.

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

They point to SBTech's current announcement 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, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The company has actually been investing in the US market considering that 2011, when it acquired 3 US firms to develop a presence in Nevada.

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

It works as threat supervisor 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 become a household name in Nevada but that's not necessarily the objective all over.

"We definitely intend to have a really significant brand name presence in New Jersey," he stated. "In other states, it will just depend upon policy and possibly who our regional partner is."

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

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