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UK sports betting firms gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on wagering entered into result in Delaware, a small east coast state about two hours from Washington.

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting wagering.

The market sees a "when in a generation" chance to develop a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with debt consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.

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But the industry states relying on the US stays a risky bet, as UK companies deal with complicated state-by-state policy and competition from entrenched regional interests.

"It's something that we're truly concentrating on, but equally we don't desire to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are wishing to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond 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 actually legalise sports betting, leaving that concern to local lawmakers.

That is anticipated to cause significant variation in how firms get certified, where sports betting wagering can occur, and which occasions are open to speculation - with huge implications for the size of the marketplace.

Potential income varieties from $4.2 bn to almost $20bn each year depending on elements 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'", said Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he said: "I think the majority of people ... are looking at this as, 'it's a chance however 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 kind by 2023, developing a market with about $6bn in yearly revenue.

But bookies deal with a far different landscape in America than they perform in the UK, where sports betting shops are a regular sight.

US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have likewise been sluggish to legalise numerous types of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting is typically seen in its own category, "it stays to be seen whether it gets the type of momentum people think it will," stated Keith Miller, law professor at Drake University and co-author of a book about sports betting regulation.

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

Now a consultant, he says UK firms need to approach the marketplace thoroughly, choosing partners with caution and avoiding mistakes that could cause regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to fend off high tax rates, along with requests by US sports betting leagues, which want to gather a portion of income as an "integrity charge".

International business face the added difficulty of an effective existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to protect their grass.

Analysts say UK firms will need to strike collaborations, using their expertise and technology in order to make inroads.

They indicate SBTech's recent statement that it is providing 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, but it will be partnerships and it will be driven by technology," Mr Hawkley said.

'It will just depend'

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

The business has actually been buying the US market since 2011, when it acquired three US firms to establish an existence in Nevada.

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

It works as danger manager for the Delaware Lottery and has invested millions along with a local designer in a New Jersey horse racing track.

Mr Asher said William Hill has ended up being a household name in Nevada however that's not necessarily the objective everywhere.

"We certainly intend to have an extremely considerable brand existence in New Jersey," he stated. "In other states, it will just depend upon guideline and possibly who our local partner is."

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

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