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UK sports betting companies gamble on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new rules on wagering entered result in Delaware, a small east coast state about two hours from Washington.

Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
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The modifications are the very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.

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

For UK companies, which are facing consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly opportune.

Why the gambling market faces an uncertain future

How does illegal sports betting wagering work and what are the worries?

But the market says counting on the US stays a dangerous bet, as UK business deal with complicated state-by-state regulation and competitors from established regional interests.

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

'Require time'

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

Firms are wishing to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

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

That is expected to result in substantial variation in how firms get accredited, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

ranges from $4.2 bn to practically $20bn each year depending on factors like how many states transfer 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 substantial'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's an opportunity 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, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, creating a market with about $6bn in annual earnings.
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But bookies deal with a far various landscape in America than they do in the UK, where wagering stores are a regular sight.

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

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

States have also been slow to legalise lots of types of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting wagering is generally seen in its own category, "it plainly stays to be seen whether it gets the type of momentum individuals 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 chief executive of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served prison time.

Now an expert, he says UK firms should approach the market carefully, choosing partners with care and preventing mistakes that could result in regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm unsure whether it is an opportunity for business," he states. "It actually is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which desire to collect a portion of income as an "integrity charge".
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International companies deal with the included obstacle of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to safeguard their grass.

Analysts state UK firms will need to strike partnerships, offering their know-how and innovation in order to make inroads.

They indicate SBTech's current statement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.
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"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

The business has been buying the US market because 2011, when it acquired three US companies to establish an existence in Nevada.
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William Hill now utilizes about 450 people in the US and has announced collaborations with casinos 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 said William Hill has actually ended up being a household name in Nevada however that's not always the goal all over.

"We definitely mean to have a really significant brand existence in New Jersey," he said. "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 wagering market in the world," he added. "Obviously that's not going to occur on day one."

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