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UK sports betting firms bet on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

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

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

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

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

For UK companies, which are facing debt consolidation, competitors and harder rules from UK regulators, the timing is especially suitable.

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But the industry says relying on the US remains a risky bet, as UK companies face complicated state-by-state policy and competition from established regional interests.

"It's something that we're truly concentrating on, but similarly we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are wishing to tap into more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

The judgment found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that question to local lawmakers.

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

Potential earnings varieties from $4.2 bn to nearly $20bn each year depending on aspects 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'", 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 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in annual earnings.

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

US laws restricted sports betting largely to Native American lands and Nevada's Las Vegas strip till reasonably just 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 lots of types of online gambling, in spite of a 2011 Justice Department opinion that appeared to eliminate obstacles.

While sports betting is generally viewed in its own category, "it plainly remains to be seen whether it gets the type of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.
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David Carruthers is the former president of BetonSports, who was arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK firms ought to approach the marketplace thoroughly, picking partners with care and preventing missteps that might lead to regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm uncertain whether it is an opportunity for organization," he says. "It really depends on the outcome of [state] legislation and how business operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with requests by US sports betting leagues, which desire to gather a portion of profits as an "stability cost".
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International companies deal with the added difficulty of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are seeking to safeguard their grass.

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

They indicate SBTech's current announcement that it is supplying innovation 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 partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will just depend'

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

The company has been buying the US market since 2011, when it acquired three US companies to develop an existence in Nevada.

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

It works as danger supervisor for the Delaware Lottery and has actually invested millions alongside a local developer in a New Jersey horse racing track.

Mr Asher said William Hill has actually ended up being a home name in Nevada but that's not necessarily the goal all over.

"We definitely plan to have an extremely substantial brand name presence in New Jersey," he stated. "In other states, it will just depend upon regulation and potentially who our regional 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 day one."
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