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UK wagering companies gamble on US after sports betting wager judgment

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 in America.

From Tuesday, brand-new rules on wagering entered into result in Delaware, a tiny east coast state about 2 hours from Washington.

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

The modifications are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The market sees a "as soon as in a generation" chance to develop a brand-new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are facing debt consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly suitable.

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But the market states counting on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competitors from established local interests.

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

'Take time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue 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 struck down a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

The judgment discovered 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 legislators.

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

Potential revenue ranges from $4.2 bn to almost $20bn annually depending on aspects like how many states relocate to legalise, Oxford Economics approximated in a 2017 study for the Association.

"There was a great deal of 'this is going to be substantial'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I believe the majority of people ... 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 take time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some form by 2023, creating a market with about $6bn in yearly profits.
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But bookies deal with a far different landscape in America than they do in the UK, where wagering shops are a frequent sight.

US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have likewise been slow to legalise many forms of online gaming, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

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

Now a consultant, he states UK firms should approach the marketplace thoroughly, selecting partners with caution and preventing missteps that could lead to regulator backlash.

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

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to collect a percentage of income as an "stability cost".

International business deal with the added obstacle of a powerful existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to defend their turf.

Analysts state UK companies will require to strike collaborations, offering their expertise and innovation in order to make inroads.

They point to SBTech's recent announcement 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 everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.
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The business has actually been investing in the US market since 2011, when it bought 3 US companies to establish a presence in Nevada.

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

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

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

"We definitely mean to have a very considerable brand name existence in New Jersey," he stated. "In other states, it will simply depend on guideline and possibly who our regional partner is."

"The US is going to be the most significant sports betting market worldwide," he included. "Obviously that's not going to occur on day one."

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