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UK wagering firms gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, new guidelines on wagering came into effect 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 modifications are the first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

The industry sees a "once in a generation" opportunity to develop 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 firms, which are facing consolidation, increased online competitors and tougher rules from UK regulators, the timing is particularly appropriate.

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But the market says 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 actually concentrating on, however similarly we don't wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are wishing to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting wagering.

The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional legislators.

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

Potential revenue ranges from $4.2 bn to nearly $20bn annually depending on elements like the number of states transfer 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 substantial'", stated Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think many 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some form by 2023, developing a market with about $6bn in yearly revenue.
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But bookmakers face a far various landscape in America than they perform in the UK, where wagering shops are a frequent sight.
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US laws restricted sports betting mostly to Native American lands and Nevada's Las Vegas strip till relatively recently.

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

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

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

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

Now a specialist, he states UK firms should approach the market carefully, picking partners with care and preventing missteps that could result in regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is an opportunity for organization," he says. "It really depends on the outcome of [state] legislation and how the business operators pursue the opportunity."
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'It will be partnerships'

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

International business deal with the added difficulty of an effective existing gaming market, with casino operators, state-run lottos and Native American tribes that are seeking to protect their turf.

Analysts say UK companies will require to strike partnerships, offering their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of offers most 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 just depend'

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

The business has actually been purchasing the US market because 2011, when it bought three US companies to develop an existence in Nevada.

William Hill now uses about 450 people in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.
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It works as threat manager for the Delaware Lottery and has actually 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 however that's not always the objective all over.
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"We certainly intend to have a very substantial brand name existence in New Jersey," he said. "In other states, it will just depend on policy and possibly who our local partner is."
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"The US is going to be the greatest sports betting wagering market in the world," he included. "Obviously that's not going to take place on day one."

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