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

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting entered result in Delaware, a small 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 very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit 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 expert David Jennings, who heads leisure research at Davy.

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

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But the industry states relying on the US stays a dangerous bet, as UK companies face complex state-by-state policy and competitors from established regional interests.

"It's something that we're really focusing on, however equally we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US dream 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 released in January.
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Firms are hoping to use more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.

The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that concern to regional lawmakers.

That is expected to result in significant variation in how firms get certified, where sports betting wagering can take place, and which occasions are open to speculation - with huge implications for the size of the market.

Potential revenue ranges from $4.2 bn to almost $20bn every year depending on factors like how lots of states relocate 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 said: "I think many 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 time'."
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'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in yearly revenue.

But bookmakers face a far different landscape in America than they perform in the UK, where wagering shops are a frequent sight.
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US laws limited gaming mostly to Native American lands and Nevada's Las Vegas strip up until relatively recently.

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

States have also been slow to legalise lots of kinds of online gambling, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

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

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

Now an expert, he says UK firms need to approach the market thoroughly, selecting partners with care and avoiding bad moves that might cause regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to ward off high tax rates, along with demands by US sports betting leagues, which want to gather a percentage of revenue as an "integrity charge".

International companies face the added challenge of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their grass.

Analysts state UK firms will require to strike collaborations, providing their expertise and technology in order to make inroads.

They indicate SBTech's recent announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the type of offers most likely to materialise.

"It will be a win-win for everyone, but it will be collaborations and it will be driven by technology," Mr Hawkley stated.

'It will just depend'

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

The company has actually been purchasing the US market considering that 2011, when it acquired 3 US firms to develop a presence in Nevada.

William Hill now employs about 450 individuals 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 actually invested millions alongside a regional developer 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 necessarily the goal everywhere.
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"We certainly mean to have an extremely substantial brand existence in New Jersey," he stated. "In other states, it will just depend upon guideline and potentially who our regional partner is."

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

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