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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 reporter, New York

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

From Tuesday, brand-new guidelines on wagering entered 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 could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting.

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

For UK companies, which are coming to grips with consolidation, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.

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

"It's something that we're really concentrating on, but similarly we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Take time'
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The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, 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 overruled a 1992 federal law that disallowed states outside of Nevada and a few 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 wagering, that question to regional lawmakers.

That is anticipated to result in significant variation in how companies get certified, where sports betting wagering can take place, and which events are open to speculation - with big implications for the size of the market.
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Potential income ranges from $4.2 bn to nearly $20bn every year depending on aspects like the number of 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 substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.
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Now, he said: "I believe the majority of people ... 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 some time'."

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they do in the UK, where wagering stores are a frequent sight.

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably recently.

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

States have also been slow to legalise numerous forms of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting wagering is generally seen in its own classification, "it clearly stays to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now an expert, he says UK firms ought to approach the market carefully, choosing partners with caution and avoiding bad moves that might lead to 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 really is reliant on the result of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which wish to gather a percentage of income as an "integrity charge".

International business face the added difficulty of an effective existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.

Analysts say UK companies will require to strike partnerships, providing their know-how and innovation in order to make inroads.

They point to SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals 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 said.

'It will just depend'

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

The business has been buying the US market since 2011, when it purchased three US companies to develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.

It works as danger supervisor 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 ended up being a home name in Nevada however that's not necessarily the goal all over.

"We definitely intend to have a really substantial brand name existence 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 greatest sports betting wagering market on the planet," he added. "Obviously that's not going to occur on the first day."

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