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UK sports betting companies bet on US after sports betting wager ruling

5 June 2018
bit.ly
By Natalie Sherman

Business press reporter, New york city

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

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

Neighbouring New Jersey could start 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 way for states to allow sports betting.

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

For UK companies, which are coming to grips with consolidation, increased online competition and harder rules from UK regulators, the timing is especially appropriate.

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But the industry says on the US remains a risky bet, as UK business face complicated state-by-state policy and competition from entrenched local interests.

"It's something that we're actually concentrating on, however equally we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting website FanDuel.

'Take 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 published in January.

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

The judgment found the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local lawmakers.

That is anticipated to lead to substantial variation in how firms get certified, where sports betting can occur, and which occasions are open to speculation - with big implications for the size of the market.

Potential earnings varieties from $4.2 bn to practically $20bn annually depending on factors like how many states move to legalise, Oxford Economics estimated in a 2017 research study for the American Gaming Association.

"There was a lot of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he said: "I believe the majority of 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 time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly profits.

But bookmakers deal with a far various landscape in America than they carry out in the UK, where wagering shops are a regular sight.

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

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

States have also been sluggish to legalise lots of kinds of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to remove barriers.

While sports betting wagering is usually seen in its own classification, "it plainly remains to be seen whether it gets the kind of momentum individuals think 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 previous primary executive of BetonSports, who was jailed in the US in 2006 for running an overseas online sportsbook and served jail time.

Now an expert, he states UK firms should approach the marketplace carefully, picking partners with care and avoiding mistakes that might result in regulator reaction.

"This is a chance for the American sports betting wagerer ... I'm unsure whether it is a chance for company," he says. "It really depends on the outcome of [state] legislation and how the service operators pursue the chance."

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which desire to gather a portion of income as an "stability cost".

International companies face the included difficulty of a powerful existing video gaming industry, with casino operators, state-run lottery games and Native American tribes that are looking for to safeguard their turf.

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

They indicate SBTech's current statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everyone, but 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 realities.

The business has actually been investing in the US market since 2011, when it bought three US firms to develop a presence in Nevada.

William Hill now employs about 450 people in the US and has actually revealed partnerships with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has invested millions alongside a regional designer in a New Jersey horse racing track.

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

"We certainly plan to have a very considerable brand name existence in New Jersey," he said. "In other states, it will simply depend on policy and potentially 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 take place on the first day."

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