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UK wagering companies bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New York

It's high stakes for UK firms as sports betting starts to spread out in America.
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From Tuesday, brand-new guidelines on wagering entered effect in Delaware, a tiny east coast state about two hours from Washington.
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Neighbouring New Jersey might begin accepting sports betting bets as early as Friday.

The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

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

Why the gambling industry faces an unpredictable future

How does prohibited sports betting work and what are the worries?

But the industry says depending on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're actually focusing on, but equally we do not desire to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Require time'

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

Firms are wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

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 concern to regional legislators.

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

Potential profits varieties from $4.2 bn to nearly $20bn each year depending on factors like how lots of states relocate 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.
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Now, he stated: "I believe many people ... 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 time'."

to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in yearly income.

But bookies deal with a far various landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.

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

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

States have also been sluggish to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department opinion that appeared to eliminate challenges.

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

David Carruthers is the former 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 should approach the marketplace thoroughly, choosing partners with caution and preventing missteps that might result in regulator reaction.

"This is a chance for the American sports betting gambler ... I'm not sure whether it is a chance for company," he states. "It actually is dependent on the outcome of [state] legislation and how business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to collect a percentage of income as an "integrity fee".

International business deal with the included obstacle of an effective existing video gaming industry, with casino operators, state-run lottos and Native American people that are looking for to protect their grass.

Analysts say UK firms will need to strike partnerships, using their know-how and technology in order to make inroads.

They indicate SBTech's recent statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.
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"It will be a win-win for everyone, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The company has actually been purchasing the US market given that 2011, when it acquired 3 US firms to establish an existence in Nevada.

William Hill now utilizes about 450 people in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a family name in Nevada however that's not necessarily the objective everywhere.

"We certainly mean to have a very significant brand name existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our local partner is."
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"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to occur on the first day."

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