UK Betting Firms Gamble On US After Sports Wager Ruling

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UK sports betting companies bet on US after sports betting wager judgment
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5 June 2018
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By Natalie Sherman


Business reporter, New York
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It's high stakes for UK companies as sports betting starts to spread out in America.


From Tuesday, brand-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 changes are the very first in what might become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting.


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


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


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But the market says counting on the US remains a risky bet, as UK companies face complicated state-by-state regulation and competition from entrenched regional interests.


"It's something that we're actually concentrating on, however equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US dream sports betting site FanDuel.


'Take some time'


The US represented about 23% of the world's $244bn (₤ 182bn) in gaming revenue in 2015, according to a report by Technavio, external published in January.


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


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


That is expected to cause substantial variation in how firms get accredited, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the market.


Potential revenue varieties from $4.2 bn to nearly $20bn yearly depending upon elements like the number of states transfer to legalise, approximated in a 2017 study for the American Gaming Association.


"There was a great deal of 'this is going to be substantial'", stated Will Hawkley, London-based head of leisure for consultants KPMG.


Now, he said: "I think the majority of people ... are taking a look 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 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, creating a market with about $6bn in annual earnings.


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


US laws minimal gaming mostly to Native American lands and Nevada's Las Vegas strip up until relatively recently.


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


States have actually also been sluggish to legalise numerous types of online gambling, despite a 2011 Justice Department opinion that appeared to remove barriers.


While sports betting is usually seen in its own classification, "it plainly remains to be seen whether it gets the sort of momentum people believe it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting guideline.


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


Now an expert, he says UK companies must approach the marketplace carefully, choosing partners with care and avoiding errors that might lead to regulator reaction.


"This is an opportunity for the American sports betting gambler ... I'm not exactly sure whether it is a chance for business," he says. "It really depends on the outcome of [state] legislation and how the business operators pursue the chance."


'It will be partnerships'


As legalisation starts, sports betting companies are lobbying to fend off high tax rates, in addition to requests by US sports betting leagues, which want to collect a portion of revenue as an "integrity cost".


International business face the included obstacle of a powerful existing video gaming market, with casino operators, state-run lottery games and Native American people that are seeking to defend their grass.


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


They indicate SBTech's recent statement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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 simply depend'


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


The business has been purchasing the US market because 2011, when it purchased three US firms to establish a presence in Nevada.


William Hill now utilizes 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 alongside a local 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 everywhere.
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"We certainly mean to have an extremely considerable brand presence in New Jersey," he stated. "In other states, it will just depend upon policy and potentially who our regional partner is."


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


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