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UK sports betting companies bet on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business press reporter, New york city

It's high stakes for UK companies as sports betting starts to spread out in America.
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From Tuesday, brand-new guidelines on wagering came into result in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.

The modifications are the first in what could become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

The market sees a "once in a generation" opportunity to develop 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 firms, which are grappling with consolidation, increased online competitors and harder rules from UK regulators, the timing is particularly opportune.

Why the gaming market deals with an unsure future

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

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

"It's something that we're truly concentrating on, however similarly we do not wish to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US dream sports betting site FanDuel.

'Require time'

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

Firms are hoping to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred 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, leaving that question to local lawmakers.

That is expected to cause considerable variation in how firms get accredited, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the marketplace.

Potential profits ranges from $4.2 bn to practically $20bn annually depending on elements like the number of states transfer to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think 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 some time'."

'Remains to be seen"

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

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

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have also been sluggish to legalise numerous forms of online sports betting, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting is normally viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

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

Now an expert, he states UK companies must approach the marketplace thoroughly, picking partners with care and preventing missteps that might lead to regulator reaction.

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

'It will be collaborations'

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

International companies deal with the included challenge of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American people that are looking for to defend their grass.

Analysts say UK companies will need to strike collaborations, offering their competence and innovation in order to make inroads.

They point to SBTech's current announcement that it is supplying 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 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 truths.

The business has been purchasing the US market because 2011, when it bought three US firms to establish an existence in Nevada.

William Hill now uses about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.

It works as threat manager for the Delaware Lottery and has invested millions alongside 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 objective everywhere.

"We certainly intend to have an extremely considerable in New Jersey," he stated. "In other states, it will just depend on regulation and potentially who our regional partner is."

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

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