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UK Betting Firms Gamble on uS After Sports Wager Ruling

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UK wagering firms gamble on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on sports betting came into impact in Delaware, a small 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 very first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting.

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

For UK companies, which are coming to grips with combination, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.

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But the market says counting on the US remains a risky bet, as UK business deal with complex state-by-state regulation and competition from entrenched local interests.

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

'Take some time'

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

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

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

That is to result in substantial variation in how firms get licensed, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential income ranges from $4.2 bn to practically $20bn each year depending on 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 lot of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

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 some time'."

'Remains to be seen"

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

But bookies deal with a far different 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 until fairly recently.

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

States have likewise been slow to legalise numerous forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting wagering is generally seen in its own category, "it plainly remains to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.

Now a specialist, he states UK firms need to approach the market carefully, choosing partners with care and avoiding errors that could lead to regulator backlash.

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

'It will be collaborations'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which desire to gather a percentage of profits as an "stability cost".

International companies face the included challenge of a powerful existing gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their grass.

Analysts state UK companies will require to strike collaborations, using their knowledge and technology in order to make inroads.

They indicate SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.

"It will be a win-win for everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The business has been purchasing the US market considering that 2011, when it bought 3 US firms to develop an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a family name in Nevada but that's not necessarily the objective all over.

"We certainly intend to have a very significant brand existence in New Jersey," he stated. "In other states, it will just depend on guideline and potentially who our regional partner is."

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