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UK sports betting firms bet on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on wagering came into impact in Delaware, a tiny east coast state about two hours from Washington.

Neighbouring New Jersey might start accepting sports betting bets as early as Friday.

The changes are the very 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.

The industry sees a "when in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based financial expert David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with consolidation, increased online competition and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the market says counting on the US stays a dangerous bet, as UK business face complicated state-by-state policy and competitors from 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 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 in 2015, according to a report by Technavio, external published in January.

Firms are wishing to use more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local lawmakers.

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

Potential revenue varieties from $4.2 bn to almost $20bn every year depending on factors like how numerous states move 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 specialists KPMG.

Now, he stated: "I think a lot of individuals ... are looking 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, developing a market with about $6bn in yearly income.

But bookmakers face a far various landscape in America than they carry out in the UK, where wagering stores are a frequent sight.

US laws minimal gaming mostly 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 sluggish to legalise lots of forms of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

While sports betting is normally seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the former president of BetonSports, who was detained in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he states UK firms need to approach the marketplace carefully, choosing partners with caution and preventing missteps that might cause regulator backlash.

"This is a chance for the American sports betting bettor ... I'm uncertain whether it is a chance for company," he states. "It really is reliant on the outcome of [state] legislation and how the business operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to gather a portion of revenue as an "integrity charge".

International companies face the included difficulty of an effective existing video gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to protect their turf.

Analysts state UK companies will need to strike partnerships, providing their competence and innovation in order to make inroads.

They indicate SBTech's current statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

"It will be a win-win for everybody, however 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 considering that 2011, when it bought three US firms to establish an existence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has invested millions together with a regional developer in a New Jersey horse racing track.

Mr Asher said William Hill has become a home name in Nevada however that's not necessarily the goal everywhere.

"We certainly plan to have a very substantial brand name presence in New Jersey," he stated. "In other states, it will simply depend on regulation and possibly 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 occur on the first day."

More on this story

US judgment opens method for sports betting

14 May 2018

Paddy Power buys dream sports betting site

23 May 2018

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