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

From Tuesday, brand-new guidelines on sports betting entered into impact in Delaware, a small east coast state about two hours from Washington.

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

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

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

For UK companies, which are facing debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly suitable.

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

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

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.

Firms are wishing 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.

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

That is expected to cause substantial variation in how get certified, where sports betting can occur, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential income varieties from $4.2 bn to almost $20bn every year depending on elements like how many states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think most 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, forecasts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly revenue.

But bookmakers face a far various landscape in America than they perform in the UK, where sports betting shops are a frequent sight.

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have also been slow to legalise numerous kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.

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

David Carruthers is the previous 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 states UK companies must approach the market carefully, choosing partners with care and preventing errors that might cause regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a portion of profits as an "stability fee".

International business deal with the added obstacle of a powerful existing gaming market, with casino operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

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

They point to SBTech's recent announcement that it is providing innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

"It will be a win-win for everybody, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The company has actually been purchasing the US market because 2011, when it purchased 3 US firms to develop an existence in Nevada.

William Hill now uses about 450 people 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 actually invested millions together with a regional designer in a New Jersey horse racing track.

Mr Asher stated William Hill has actually become a home name in Nevada however that's not always the goal all over.

"We definitely plan to have an extremely significant brand presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly who our regional partner is."

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

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