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UK wagering firms bet on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business press reporter, New york city

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

From Tuesday, brand-new rules on wagering entered into result in Delaware, a tiny east coast state about 2 hours from Washington.

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

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

The market sees a "when in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research study at Davy.

For UK companies, which are coming to grips with debt consolidation, increased online competition and tougher rules from UK regulators, the timing is particularly suitable.

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

"It's something that we're really focusing on, but equally we don't want to overhype it," said James Midmer, representative at Paddy Power Betfair, which just recently purchased the US fantasy sports betting site FanDuel.

'Require time'

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

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

The ruling discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting wagering, leaving that concern to regional legislators.

That is anticipated to result in considerable variation in how firms get certified, where sports betting can happen, and which occasions are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn yearly depending upon aspects like the number 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 huge'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think a lot 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 in some form by 2023, producing a market with about $6bn in yearly profits.

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

US laws restricted gaming mostly to Native American lands and Nevada's Las Vegas strip until reasonably just recently.

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

States have actually also been sluggish to legalise lots of types of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate barriers.

While sports betting wagering is normally seen in its own classification, "it plainly 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 regulation.

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

Now a specialist, he states UK companies ought to approach the market carefully, picking partners with caution and preventing missteps that could cause regulator reaction.
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"This is an opportunity for the American sports betting wagerer ... I'm not exactly sure whether it is a chance for organization," he states. "It truly depends on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to fend off high tax rates, along with demands by US sports betting leagues, which wish to collect a portion of profits as an "integrity charge".

International companies face the added challenge of an effective existing gaming market, with gambling establishment operators, state-run lottos and Native American people that are looking for to protect their turf.

Analysts state UK companies will require to strike collaborations, using their competence and innovation in order to make inroads.

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

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

'It will just depend'
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Joe Asher, chief executive at William Hill US, is clear-eyed about the truths.

The business has been buying the US market given that 2011, when it bought 3 US companies to establish an existence in Nevada.

William Hill now utilizes about 450 people in the US and has 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 local designer in a New Jersey horse racing track.

Mr Asher said William Hill has actually become a home name in Nevada but that's not necessarily the goal everywhere.

"We definitely mean to have a very considerable brand presence in New Jersey," he said. "In other states, it will simply depend upon guideline and potentially who our is."

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

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