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UK wagering firms bet on US after sports betting wager judgment
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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 in America.
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From Tuesday, brand-new rules on sports betting entered into effect in Delaware, a small east coast state about 2 hours from Washington.

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

The changes are the very first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting.

The industry sees a "as soon as in a generation" opportunity to establish a new market in sports betting-mad America, said Dublin-based financial expert David Jennings, who heads leisure research at Davy.

For UK firms, which are facing combination, increased online competition and harder rules from UK regulators, the timing is especially suitable.

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But the industry states counting on the US remains a dangerous bet, as UK business deal with complex state-by-state guideline and competitors from established local interests.

"It's something that we're truly focusing on, however similarly we do not want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.

'Require time'

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

Firms are intending to use more of that activity after last month's decision, which struck down a 1992 federal law that barred states outside of Nevada and a couple of others from authorising sports betting.
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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 lead to considerable variation in how firms get licensed, where sports betting can happen, and which events are open to speculation - with huge ramifications for the size of the marketplace.

Potential profits ranges from $4.2 bn to practically $20bn yearly depending upon factors like the number of states move to legalise, Oxford Economics estimated in a 2017 research 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 specialists KPMG.
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Now, he stated: "I think the majority of people ... are taking a look 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 some time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some type by 2023, creating a market with about $6bn in yearly profits.

But bookmakers face a far different landscape in America than they carry out in the UK, where wagering shops are a frequent sight.

US laws limited sports betting mainly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have actually also been sluggish to legalise numerous types of online gambling, in spite of a 2011 Justice Department viewpoint that appeared to remove obstacles.

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

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

Now a consultant, he states UK companies must approach the marketplace carefully, picking partners with caution and avoiding mistakes that might result in regulator backlash.

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

'It will be collaborations'

As legalisation begins, sports betting companies are lobbying to ward off high tax rates, in addition to demands by US sports betting leagues, which wish to gather a portion of income as an "integrity cost".

International business deal with the added difficulty of a powerful existing gaming market, with gambling establishment operators, state-run lottery games and Native American tribes that are seeking to defend their turf.

Analysts say UK companies will need to strike partnerships, providing their know-how and technology in order to make inroads.

They point to SBTech's recent statement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the kind of deals most likely to materialise.

"It will be a win-win for everyone, but it will be 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 company has been investing in the US market considering that 2011, when it purchased three US companies to develop a presence 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 manager for the Delaware Lottery and has invested millions alongside a local developer in a New Jersey horse racing track.

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

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

"The US is going to be the biggest sports betting market worldwide," he added. "Obviously that's not going to occur on day one."

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