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UK wagering firms bet on US after sports betting wager ruling

5 June 2018
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By Natalie Sherman

Business press reporter, New york city

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

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

Neighbouring New Jersey might start accepting sports betting bets as early as Friday.
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The modifications are the 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 market sees a "once in a generation" opportunity to establish a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK companies, which are grappling with debt consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

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But the market states counting on the US stays a dangerous bet, as UK business deal with complex state-by-state policy and competition from established regional interests.
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"It's something that we're really concentrating on, but equally we do not wish to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just 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 profits in 2015, according to a report by Technavio, external published in January.

Firms are intending to tap into more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from wagering.

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 legislators.

That is expected to lead to considerable variation in how firms get certified, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $20bn every year depending on factors like the number of states relocate to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.
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"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I think many people ... are taking a look at this as, 'it's an opportunity but 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 wagering in some kind by 2023, creating a market with about $6bn in yearly earnings.

But bookmakers deal with a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.

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

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

States have also been slow to legalise numerous types of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting is generally seen in its own category, "it clearly stays 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 regulation.

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 firms ought to approach the marketplace thoroughly, choosing partners with care and avoiding mistakes that might result in regulator reaction.

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

'It will be collaborations'

As legalisation starts, 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 revenue as an "integrity cost".
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International companies deal with the added difficulty of a powerful existing gaming market, with casino operators, state-run lotteries and Native American people that are seeking to defend their grass.

Analysts state UK companies will require to strike partnerships, providing their expertise and technology in order to make inroads.

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

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

'It will just depend'
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Joe Asher, chief executive at William Hill US, is clear-eyed about the realities.

The business has been investing in the US market given that 2011, when it purchased 3 US companies to develop an existence in Nevada.

William Hill now utilizes about 450 people in the US and has revealed partnerships with gambling establishments in Iowa and New Jersey.

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

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

"We certainly plan to have a very substantial brand name presence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our regional partner is."

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

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