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

By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting came into effect 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 changes are the very 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 industry sees a "when in a generation" opportunity to establish a brand-new market in sports betting-mad America, stated Dublin-based financial analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with combination, increased online competition and tougher rules from UK regulators, the timing is particularly appropriate.
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But the market states relying on the US stays a dangerous bet, as UK companies deal with complex state-by-state guideline and competition from entrenched local interests.

"It's something that we're really concentrating on, but equally we do not desire to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming earnings in 2015, according to a report by Technavio, external published in January.
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Firms are wishing to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting wagering.
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The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that concern to regional legislators.

That is to result in considerable variation in how firms get licensed, where sports betting wagering can happen, and which events are open to speculation - with huge implications for the size of the market.

Potential income ranges from $4.2 bn to nearly $20bn every year depending on aspects like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe a lot 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 take time'."

'Remains to be seen"
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Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual income.

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

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip up until reasonably just recently.

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

States have actually also been sluggish to legalise lots of forms of online gambling, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting is usually seen in its own classification, "it clearly remains to be seen whether it gets the sort of momentum individuals believe it will," stated Keith Miller, law teacher at Drake University and co-author of a book about sports betting wagering regulation.

David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a consultant, he states UK firms must approach the marketplace thoroughly, selecting partners with care and avoiding missteps that might cause regulator reaction.

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

'It will be partnerships'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to collect a percentage of income as an "stability charge".

International companies face the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to safeguard their turf.

Analysts say UK firms will need to strike collaborations, providing their know-how and innovation in order to make inroads.

They indicate SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers most 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 said.

'It will simply depend'

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

The business has actually been purchasing the US market given that 2011, when it purchased three US firms to develop an existence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

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

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

"We certainly plan to have an extremely considerable brand existence in New Jersey," he said. "In other states, it will simply depend upon regulation and possibly who our local partner is."

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

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