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

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, brand-new guidelines on wagering came into result in Delaware, a tiny 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 very first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.

The market sees a "when in a generation" opportunity 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 consolidation, increased online competition and tougher guidelines from UK regulators, the timing is particularly opportune.

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

"It's something that we're truly focusing on, however equally we don't want to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which recently bought the US fantasy sports betting site FanDuel.

'Require time'

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

Firms are wishing to tap into more of that activity after last month's choice, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports betting.

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

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

Potential income varieties from $4.2 bn to practically $20bn annually depending upon aspects like the number of states relocate to legalise, Oxford Economics estimated in a 2017 study for the American Gaming Association.

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

Now, he said: "I think many people ... are taking a look 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 require time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, developing a market with about $6bn in yearly revenue.

But bookmakers deal with a far various landscape in America than they perform in the UK, where wagering stores are a frequent sight.

US laws minimal sports betting mostly to Native American lands and Nevada's Las Vegas strip till relatively just recently.

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

States have actually also been slow to legalise many forms of online sports betting, regardless of a 2011 Justice Department opinion that appeared to get rid of challenges.

While sports betting wagering is typically seen in its own category, "it clearly stays to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting policy.

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

Now a consultant, he states UK firms need to approach the market thoroughly, selecting partners with caution and preventing missteps that could cause regulator backlash.

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

'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 percentage of revenue as an " cost".

International business face the included obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lottery games and Native American people that are looking for to defend their turf.

Analysts say UK companies will need to strike collaborations, offering their know-how and innovation in order to make inroads.

They point to SBTech's recent announcement that it is providing technology 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, however it will be partnerships and it will be driven by innovation," Mr Hawkley said.

'It will just depend'

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

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

William Hill now utilizes about 450 individuals in the US and has actually revealed collaborations with gambling establishments in Iowa and New Jersey.

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

Mr Asher said William Hill has ended up being a home name in Nevada but that's not necessarily the objective all over.

"We certainly intend to have an extremely substantial brand name presence in New Jersey," he said. "In other states, it will just depend upon guideline and potentially who our regional partner is."

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

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