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UK wagering companies bet 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, brand-new guidelines on wagering entered into impact in Delaware, a tiny east coast state about two hours from Washington.

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

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

The industry sees a "when in a generation" opportunity to establish a new market in sports betting-mad America, stated 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 from UK regulators, the timing is especially opportune.

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But the market says relying on the US remains a risky bet, as UK companies face complicated state-by-state policy and competition from established local interests.

"It's something that we're actually focusing on, however similarly we do not want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently bought the US fantasy sports betting site FanDuel.

'Take time'

The US represented 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 wanting to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.
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The ruling found the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to local legislators.
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That is anticipated to result in significant variation in how companies get licensed, where sports betting wagering can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential profits varieties from $4.2 bn to almost $20bn annually depending upon aspects like how lots of states transfer to legalise, Oxford Economics approximated 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 stated: "I think many individuals ... 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 time'."

'Remains to be seen"

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

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

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip till reasonably just recently.

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

States have likewise been slow to legalise lots of kinds of online sports betting, regardless of a 2011 Justice Department viewpoint that appeared to remove challenges.

While sports betting is usually seen in its own classification, "it clearly stays 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 policy.

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

Now an expert, he says UK companies must approach the market thoroughly, choosing partners with care and avoiding errors that might cause regulator backlash.

"This is an opportunity for the American sports betting bettor ... I'm uncertain whether it is an opportunity for business," he says. "It actually is reliant on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting wagering firms are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to gather a portion of revenue as an "stability fee".

International business deal with the added challenge of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American tribes that are seeking to protect their grass.

Analysts say UK firms will need to strike partnerships, providing their know-how and technology in order to make inroads.

They indicate SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most 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 stated.

'It will just depend'

Joe Asher, president at William Hill US, is clear-eyed about the realities.
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The business has been purchasing the US market because 2011, when it acquired three US firms to develop a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced partnerships with casinos in Iowa and New Jersey.

It works as threat manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.
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Mr Asher stated William Hill has actually become a family name in Nevada but that's not necessarily the objective everywhere.

"We definitely intend to have an extremely considerable brand existence in New Jersey," he said. "In other states, it will simply depend upon policy and possibly who our regional partner is."
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"The US is going to be the biggest sports betting market in the world," he added. "Obviously that's not going to occur on the first day."

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