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UK sports betting firms gamble on US after sports betting wager judgment

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 in America.

From Tuesday, brand-new rules on wagering entered into effect in Delaware, a tiny east coast state about two hours from Washington.

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

The industry sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK firms, which are grappling with consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

Why the gambling industry faces an uncertain future

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

But the market says counting on the US remains a dangerous bet, as UK companies deal with complex state-by-state regulation and competition from established local interests.

"It's something that we're actually focusing on, however similarly we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream sports betting site FanDuel.
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'Require time'

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

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

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that concern to local lawmakers.
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That is anticipated to cause considerable variation in how companies get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential profits ranges from $4.2 bn to nearly $20bn each year depending upon factors like the number of states move 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'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I believe many people ... are looking at this as, 'it's an opportunity 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, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in yearly income.

But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.

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

In the popular imagination, sports betting has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have likewise been slow to legalise lots of kinds of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove challenges.

While sports betting is normally seen in its own category, "it plainly remains to be seen whether it gets the sort of momentum individuals think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.
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David Carruthers is the previous president of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he says UK companies need to approach the marketplace carefully, picking partners with caution and avoiding bad moves that could lead to regulator backlash.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is an opportunity for organization," he says. "It truly is dependent on the outcome of [state] legislation and how the organization operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which desire to gather a portion of profits as an "integrity fee".

International business face the included difficulty of a powerful existing gaming market, with casino operators, state-run lottery games and Native American people that are seeking to safeguard their turf.

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

They point to SBTech's current announcement 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 everyone, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The business has been buying the US market given that 2011, when it acquired 3 US firms to establish a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has revealed partnerships 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 alongside a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a family name in Nevada but that's not necessarily the objective all over.

"We certainly intend to have an extremely significant brand name presence in New Jersey," he stated. "In other states, it will on regulation and possibly who our regional 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 occur on the first day."

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