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UK wagering firms bet on US after sports betting wager judgment

5 June 2018

By Natalie Sherman

Business reporter, New York

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

From Tuesday, new guidelines on entered effect in Delaware, a tiny east coast state about 2 hours from Washington.

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

The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to enable sports betting wagering.

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

For UK firms, which are facing combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly appropriate.

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But the industry states counting on the US stays a risky bet, as UK business face complex state-by-state regulation and competitors from entrenched local interests.

"It's something that we're truly concentrating on, but equally we do not wish to overhype it," stated James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US fantasy sports betting site FanDuel.

'Take time'

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

Firms are wanting to use more of that activity after last month's decision, which struck down a 1992 federal law that disallowed states outside of Nevada and a couple of others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to regional legislators.

That is anticipated to lead to substantial variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue ranges from $4.2 bn to practically $20bn each year depending upon elements like the number of states move to legalise, Oxford Economics estimated 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 specialists KPMG.

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

'Remains to be seen"

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

But bookmakers deal with a far various landscape in America than they carry out in the UK, where sports betting stores are a frequent sight.

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip till fairly just recently.

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

States have also been slow to legalise many types of online gambling, regardless of a 2011 Justice Department viewpoint that appeared to eliminate challenges.

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

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

Now an expert, he says UK firms ought to approach the marketplace carefully, selecting partners with caution and avoiding mistakes that could cause regulator reaction.

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

'It will be collaborations'

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

International companies face the added challenge of a powerful existing video gaming market, with casino operators, state-run lotteries and Native American people that are seeking to protect their grass.

Analysts say UK firms will require to strike collaborations, offering their expertise and innovation in order to make inroads.

They point to SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type of deals 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 company has actually been investing in the US market considering that 2011, when it purchased three US firms to develop a presence in Nevada.

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

It works as risk manager for the Delaware Lottery and has actually invested millions alongside a regional designer in a New Jersey horse racing track.

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

"We certainly mean to have a really significant brand existence 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 biggest sports betting wagering market worldwide," he included. "Obviously that's not going to occur on the first day."

More on this story

US judgment opens way for sports betting wagering

14 May 2018

Paddy Power buys fantasy sports betting site

23 May 2018