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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 companies as sports betting starts to spread out in America.

From Tuesday, new rules on wagering came into impact in Delaware, a coast state about two hours from Washington.

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

The modifications are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market 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 at Davy.

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

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But the market says depending on the US stays a risky bet, as UK business face complicated state-by-state policy and competition from entrenched regional interests.

"It's something that we're actually focusing on, however similarly we don't want to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Require time'

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

Firms are hoping to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that barred states beyond 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 concern to regional lawmakers.

That is anticipated to cause significant variation in how firms get accredited, where sports betting wagering can take place, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential profits ranges from $4.2 bn to almost $20bn yearly depending upon elements like how numerous states transfer 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 think many 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 take some time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in yearly revenue.

But bookies deal with a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have also been sluggish to legalise lots of forms of online sports betting, despite a 2011 Justice Department viewpoint that appeared to eliminate obstacles.

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

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

Now a specialist, he says UK companies ought to approach the market thoroughly, choosing partners with care and avoiding mistakes that could cause regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting firms are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which desire to collect a percentage of profits as an "integrity fee".

International companies face the included obstacle of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are looking for to protect their grass.

Analysts say UK firms will need to strike partnerships, providing their expertise and innovation in order to make inroads.

They point to SBTech's current statement that it is providing 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 everybody, however it will be collaborations and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

The business has actually been investing in the US market given that 2011, when it bought 3 US firms 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 threat supervisor for the Delaware Lottery and has actually invested millions along with a regional developer in a New Jersey horse racing track.

Mr Asher said William Hill has ended up being a home name in Nevada however that's not necessarily the goal all over.

"We definitely intend to have an extremely significant brand existence in New Jersey," he stated. "In other states, it will just depend on policy and possibly who our regional partner is."

"The US is going to be the greatest sports betting market worldwide," he included. "Obviously that's not going to happen on the first day."

More on this story

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