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UK sports betting 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 firms as sports betting starts to spread out in America.

From Tuesday, brand-new guidelines on wagering entered effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

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

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

Why the faces an unpredictable future

How does prohibited sports betting wagering work and what are the fears?

But the market states counting on the US remains a risky bet, as UK business face complex state-by-state guideline and competition from entrenched local interests.

"It's something that we're really concentrating on, however equally we don't want to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.

'Take time'

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

Firms are hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting wagering.

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

That is anticipated to lead to substantial variation in how companies get accredited, where sports betting can occur, and which occasions are open to speculation - with huge implications for the size of the market.

Potential revenue varieties from $4.2 bn to almost $20bn each year depending upon aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

"There was a lot of 'this is going to be big'", 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 but 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, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, producing a market with about $6bn in yearly earnings.

But bookies deal with a far various landscape in America than they do in the UK, where sports betting stores are a frequent sight.

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have actually likewise been sluggish to legalise lots of types of online gambling, regardless of a 2011 Justice Department opinion that appeared to eliminate barriers.

While sports betting is usually viewed in its own category, "it plainly stays to be seen whether it gets the sort of momentum individuals think it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.

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

Now an expert, he states UK firms need to approach the marketplace carefully, choosing partners with care and avoiding bad moves that might result in regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for service," he says. "It actually depends on the outcome of [state] legislation and how the business operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which wish to collect a percentage of revenue as an "integrity cost".

International companies face the included difficulty of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American tribes that are looking for to protect their turf.

Analysts say UK firms will require to strike partnerships, using their competence and innovation in order to make inroads.

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

"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The company has actually been purchasing the US market given that 2011, when it acquired three US companies to develop a presence in Nevada.

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

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

Mr Asher said William Hill has actually become a household name in Nevada however that's not necessarily the goal everywhere.

"We definitely intend to have an extremely significant brand presence in New Jersey," he said. "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 in the world," he added. "Obviously that's not going to take place on day one."

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