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UK sports betting firms bet on US after sports betting wager judgment

5 June 2018
bit.ly
By Natalie Sherman

Business reporter, New York

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

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

Neighbouring New Jersey could 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 brand-new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.

For UK companies, which are grappling with combination, increased online competition and harder guidelines from UK regulators, the timing is especially appropriate.

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But the industry states relying on the US remains a dangerous bet, as UK business face complicated state-by-state policy and competition from established regional interests.

"It's something that we're truly focusing on, however similarly we don't wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting site FanDuel.

'Take time'

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

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

That is anticipated to result in substantial variation in how companies get licensed, where sports betting can occur, and which events are open to speculation - with big implications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn yearly depending on factors like the number of states relocate to legalise, Oxford Economics approximated in a 2017 research 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 experts KPMG.

Now, he said: "I believe a lot of individuals ... are taking a look 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, forecasts that 32 states will legalise sports betting in some form by 2023, developing a market with about $6bn in yearly income.

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

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

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

States have also been slow to legalise lots of kinds of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting wagering is normally viewed in its own category, "it clearly stays to be seen whether it gets the type of momentum people 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 president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK firms need to approach the marketplace carefully, selecting partners with care and preventing mistakes that could cause regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for business," he says. "It actually depends on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which wish to collect a percentage of revenue as an "stability charge".

International business deal with the included obstacle of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to protect their turf.

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

They indicate SBTech's current announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The business has actually been investing in the US market considering that 2011, when it purchased 3 US firms to establish an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has announced partnerships with casinos 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 become a household name in Nevada however that's not necessarily the goal everywhere.

"We definitely intend to have an extremely significant brand name presence in New Jersey," he said. "In other states, it will just depend upon regulation and potentially 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 take place on day one."

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