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UK sports betting companies bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new rules on betting came into result in Delaware, a small east coast state about 2 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 way for states to enable sports betting.

The industry sees a "as soon as in a generation" opportunity 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 grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially opportune.

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But the industry states counting on the US stays a dangerous bet, as UK companies deal with complicated state-by-state policy and competitors from entrenched local interests.

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

'Require time'

The US represented about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external published in January.

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

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

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

Potential revenue ranges from $4.2 bn to practically $20bn every year depending upon elements like the number of states move to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think many people ... are taking a look 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 take time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, creating a market with about $6bn in annual profits.

But bookies deal with a far different landscape in America than they carry out in the UK, where betting shops are a frequent sight.

US laws limited gambling mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually likewise been sluggish to legalise many types of online sports betting, in spite of a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting is usually viewed in its own classification, "it clearly remains to be seen whether it gets the kind of momentum individuals think it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

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

Now a specialist, he says UK companies ought to approach the marketplace thoroughly, picking partners with care and avoiding bad moves that might lead to regulator backlash.

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

'It will be partnerships'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a portion of profits as an "stability cost".

International companies deal with the added difficulty of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their turf.

Analysts state UK companies will need to strike partnerships, providing their know-how and technology in order to make inroads.

They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the kind of deals likely to materialise.

"It will be a for everybody, however it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The company has been purchasing the US market considering that 2011, when it purchased three US companies to establish a presence in Nevada.

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

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

Mr Asher stated William Hill has actually ended up being a home name in Nevada but that's not always the goal everywhere.

"We definitely mean to have a very substantial brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

"The US is going to be the most significant sports betting market on the planet," he added. "Obviously that's not going to happen on the first day."

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