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UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting 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 changes are the first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to allow sports betting.

The industry sees a "when in a generation" chance 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 firms, which are facing consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is particularly suitable.

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But the industry says relying on the US stays a risky bet, as UK companies deal with complex state-by-state policy and competitors from entrenched local interests.

"It's something that we're actually concentrating on, however similarly we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting website FanDuel.
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'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 published in January.

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

The judgment discovered the law was an of federal power. But the court it did not really legalise sports betting wagering, leaving that question to regional lawmakers.

That is expected to result in considerable variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn each year depending upon aspects like how lots of states move 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'", said Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe the majority of people ... are looking 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, predicts that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in yearly revenue.

But bookmakers face a far various landscape in America than they perform in the UK, where betting stores are a regular sight.

US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have actually also been sluggish to legalise many types of online betting, despite a 2011 Justice Department viewpoint that appeared to remove obstacles.

While sports betting wagering is generally viewed in its own category, "it plainly 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 wagering guideline.

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 says UK firms must approach the market carefully, picking partners with care and preventing bad moves that might cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm not exactly sure whether it is a chance for company," he states. "It really depends on the result of [state] legislation and how business operators pursue the opportunity."
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'It will be collaborations'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity cost".

International business face the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their turf.

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

They point to 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.

"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 truths.

The business has been investing in the US market since 2011, when it purchased 3 US firms to develop a presence in Nevada.

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

It works as threat supervisor for the Delaware Lottery and has actually invested millions along with a regional designer in a New Jersey horse racing track.
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Mr Asher said William Hill has actually ended up being a household name in Nevada however that's not always the objective everywhere.

"We definitely intend to have a very considerable brand existence in New Jersey," he said. "In other states, it will simply depend on guideline and potentially who our local partner is."

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

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