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UK wagering companies gamble on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New York
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It's high stakes for UK firms as sports betting starts to spread in America.

From Tuesday, new guidelines on sports betting entered into result in Delaware, a small east coast state about 2 hours from Washington.

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

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

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

For UK companies, which are grappling with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.
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But the industry states on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competition from established regional interests.

"It's something that we're truly focusing on, but equally we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are wanting to take advantage of more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states beyond Nevada and a few others from authorising sports betting.

The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting, leaving that concern to local legislators.

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

Potential profits varieties from $4.2 bn to nearly $20bn each year depending upon factors like how many states transfer to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a great deal of 'this is going to be big'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he said: "I think the majority of 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, handling 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 annual profits.

But bookies face a far different landscape in America than they carry out in the UK, where wagering stores are a frequent sight.

US laws restricted gambling mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.

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

States have actually also been sluggish to legalise many kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting wagering is typically viewed in its own classification, "it clearly stays to be seen whether it gets the kind of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.

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

Now a consultant, he states UK firms need to approach the market carefully, selecting partners with caution and preventing bad moves that might cause regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to collect a portion of income as an "stability charge".

International business deal with the added difficulty of a powerful existing gaming industry, with casino operators, state-run lottos and Native American people that are looking for to safeguard their turf.

Analysts state UK firms will need to strike partnerships, offering their expertise and technology in order to make inroads.

They point to SBTech's recent announcement that it is providing 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 everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will simply depend'

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

The company has been buying the US market since 2011, when it purchased 3 US companies to develop a presence in Nevada.

William Hill now employs about 450 individuals in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We definitely intend to have a really substantial brand name presence in New Jersey," he stated. "In other states, it will just depend on guideline and possibly who our local partner is."

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

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