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UK betting companies bet on US after sports betting wager judgment

5 June 2018
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By Natalie Sherman

Business reporter, New York

It's high stakes for UK companies as sports betting wagering starts to spread out in America.
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From Tuesday, brand-new guidelines on betting came into impact in Delaware, a tiny east coast state about 2 hours from Washington.

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

The modifications are the very first in what could become a wave of after the Supreme Court last month cleared the way for states to enable sports betting.
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The industry sees a "when in a generation" opportunity to develop a new market in sports betting-mad America, stated Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with combination, increased online competition and harder rules from UK regulators, the timing is particularly opportune.

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

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

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

The judgment 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 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 huge ramifications for the size of the marketplace.

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

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

Now, he stated: "I believe many 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual income.

But bookmakers face a far different landscape in America than they do in the UK, where wagering stores are a frequent sight.
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US laws minimal sports betting mainly to Native American lands and Nevada's Las Vegas strip until fairly just recently.

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

States have also been sluggish to legalise numerous forms of online gaming, despite a 2011 Justice Department viewpoint that appeared to eliminate challenges.

While sports betting wagering is normally viewed in its own category, "it clearly remains to be seen whether it gets the sort of momentum people believe 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 arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he states UK companies must approach the marketplace thoroughly, choosing partners with caution and avoiding bad moves that might lead to regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which wish to gather a percentage of income as an "integrity charge".

International business face the added challenge of an effective existing video gaming market, with casino operators, state-run lottery games and Native American people that are looking for to protect their turf.

Analysts state UK companies will need to strike partnerships, providing their expertise and technology in order to make inroads.

They point to SBTech's recent announcement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.

"It will be a win-win for everybody, however 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 buying the US market given that 2011, when it acquired three US firms to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed collaborations with casinos in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually ended up being a family name in Nevada but that's not always the objective everywhere.

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

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

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