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

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, new rules on sports betting entered into impact in Delaware, a small east coast state about 2 hours from Washington.

Neighbouring New Jersey could 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 permit sports betting.

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

For UK companies, which are grappling with debt consolidation, increased online competitors and harder guidelines from UK regulators, the timing is especially opportune.

Why the sports betting industry deals with an unsure future

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

But the industry says depending on the US remains a dangerous bet, as UK business face complex state-by-state policy and competition from entrenched regional interests.

"It's something that we're really focusing on, however equally we do not wish to overhype it," stated James Midmer, spokesman at Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Take time'

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

Firms are wanting to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states outside of Nevada and a couple of 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 concern to local lawmakers.

That is expected to lead to significant variation in how companies get certified, where sports betting wagering can occur, and which events are open to speculation - with huge implications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $20bn each year depending upon aspects like how many states move 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 huge'", 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 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"
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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 yearly profits.

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

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually likewise been sluggish to legalise lots of forms of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

While sports betting is typically viewed in its own category, "it plainly remains to be seen whether it gets the kind of momentum people believe it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting guideline.

David Carruthers is the previous primary 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, choosing partners with care and preventing mistakes that might result in regulator backlash.

"This is an opportunity for the American sports betting gambler ... I'm uncertain whether it is an opportunity for company," he states. "It actually is dependent on the result of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

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

International companies deal with the included challenge of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American tribes that are looking for to protect their turf.

Analysts say UK companies will require to strike collaborations, offering their knowledge and technology in order to make inroads.
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They indicate SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of deals likely to materialise.

"It will be a win-win for everybody, however it will be partnerships and it will be driven by technology," Mr Hawkley stated.

'It will simply depend'

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

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

William Hill now uses about 450 people in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.

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

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

"We definitely plan to have a very substantial brand presence in New Jersey," he stated. "In other states, it will simply depend upon guideline and possibly who our local partner is."

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

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