UK wagering companies gamble on US after sports betting wager ruling
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5 June 2018
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By Natalie Sherman

Business reporter, New York

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

From Tuesday, brand-new rules on wagering entered into result 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 first in what could become a wave of legalisation after the Supreme Court last month cleared the method for states to enable sports betting wagering.

The market sees a "once in a generation" opportunity to establish a brand-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 coming to grips with combination, increased online competitors and harder rules from UK regulators, the timing is especially suitable.

Why the gambling market faces an unsure future

How does illegal sports betting wagering work and what are the worries?

But the market says depending on the US remains a risky bet, as UK companies face complicated state-by-state policy and competitors from entrenched regional interests.

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

'Take time'

The US accounted for 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 intending to take advantage of more of that activity after last month's decision, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting wagering.

The ruling discovered the law was an over-reach of federal power. But the court it did not in fact wagering, leaving that concern to local lawmakers.

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

Potential profits ranges from $4.2 bn to nearly $20bn every year depending on aspects like the number of states move 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 big'", stated Will Hawkley, London-based head of leisure for specialists KPMG.

Now, he stated: "I believe the majority of 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 take some time'."

'Remains to be seen"

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

But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a regular sight.

US laws minimal gambling largely to Native American lands and Nevada's Las Vegas strip till reasonably recently.

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

States have actually likewise been sluggish to legalise many forms of online gambling, despite a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting is generally seen in its own classification, "it clearly stays to be seen whether it gets the type of momentum individuals 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 former chief 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 says UK firms should approach the marketplace thoroughly, picking partners with care and avoiding mistakes that could cause regulator reaction.

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

'It will be collaborations'

As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as demands by US sports betting leagues, which wish to collect a percentage of revenue as an "stability fee".

International business face the included obstacle of a powerful existing video gaming market, with casino operators, state-run lottos and Native American people that are seeking to protect their turf.

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

They indicate SBTech's recent statement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the sort of offers most likely to materialise.

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

'It will simply depend'

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

The business has actually been purchasing the US market considering that 2011, when it purchased three US companies to establish an existence in Nevada.

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

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

Mr Asher said William Hill has ended up being a family name in Nevada however that's not always the goal all over.
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"We certainly intend to have a very substantial brand existence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

"The US is going to be the greatest sports betting market in the world," he added. "Obviously that's not going to happen on the first day."

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