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UK wagering firms gamble on US after sports betting wager ruling
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5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on sports betting entered into result in Delaware, a tiny east coast state about two hours from Washington.

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

The modifications are the first in what could end up being a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

The industry sees a "as soon as in a generation" chance to establish a new market in sports betting-mad America, financial analyst 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 opportune.

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But the industry states depending on the US stays a risky bet, as UK business face complex state-by-state regulation and competition from established regional interests.

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

'Require time'

The US accounted for 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 intending to tap into more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond 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 really legalise sports betting wagering, leaving that question to regional legislators.

That is expected to cause significant variation in how companies get accredited, where sports betting can occur, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to almost $20bn yearly depending on factors like the number of states relocate 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.

Now, he stated: "I think most individuals ... 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, forecasts that 32 states will legalise sports betting in some type by 2023, creating a market with about $6bn in annual revenue.

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

US laws minimal sports betting largely to Native American lands and Nevada's Las Vegas strip up until fairly just recently.

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

States have actually also been slow to legalise lots of types of online gaming, regardless of a 2011 Justice Department viewpoint that appeared to get rid of obstacles.

While sports betting is normally viewed in its own classification, "it plainly stays to be seen whether it gets the type of momentum people believe it will," stated 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 jailed in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK companies need to approach the market thoroughly, picking partners with care and preventing bad moves that might lead to regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to gather a percentage of revenue as an "integrity charge".

International business face the added difficulty of an effective existing gaming industry, with gambling establishment operators, state-run lottos and Native American people that are looking for to defend their turf.

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

They indicate SBTech's current announcement that it is providing technology for Kentucky Derby operator Churchill Downs as an example of the sort of deals most likely to materialise.

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

'It will just depend'

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

The business has been purchasing the US market given that 2011, when it acquired 3 US companies to develop a presence in Nevada.

William Hill now uses about 450 individuals in the US and has actually revealed 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 developer in a New Jersey horse racing track.

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

"We definitely plan to have a really considerable brand existence in New Jersey," he said. "In other states, it will just depend on regulation and possibly who our regional partner is."

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

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