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UK sports betting firms gamble on US after sports betting wager judgment

5 June 2018

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

From Tuesday, new guidelines on sports betting came into impact 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 might end up being a wave of legalisation after the Supreme Court last month cleared the way for states to permit sports betting.

The market sees a "as soon as in a generation" opportunity to develop a new market in sports betting-mad America, said Dublin-based monetary expert David Jennings, who heads leisure research study at Davy.
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For UK firms, which are grappling with consolidation, increased online competition and tougher rules from UK regulators, the timing is especially suitable.

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But the industry says counting on the US remains a risky bet, as UK companies deal with complex state-by-state policy and competition from established regional interests.

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

'Take some time'

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

Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed states outside of Nevada and a few others from authorising sports betting wagering.

The judgment discovered the law was an over-reach of federal power. But the court it did not in fact legalise sports betting, leaving that to local lawmakers.

That is expected to lead to significant variation in how companies get licensed, where sports betting wagering can occur, and which events are open to speculation - with huge ramifications for the size of the market.

Potential earnings ranges from $4.2 bn to almost $20bn each year depending upon aspects like how many states transfer to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he stated: "I think many people ... are taking a look at this as, 'it's a chance but 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, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting in some kind by 2023, developing a market with about $6bn in annual earnings.

But bookmakers face a far various landscape in America than they do in the UK, where sports betting stores are a regular sight.

US laws limited gaming mainly to Native American lands and Nevada's Las Vegas strip till relatively just recently.

In the popular creativity, sports betting wagering has actually long been connected to a 1919 baseball World Series match-fixing scandal.
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States have likewise been sluggish to legalise lots of forms of online sports betting, despite a 2011 Justice Department opinion that appeared to remove obstacles.

While sports betting is usually viewed in its own classification, "it clearly stays to be seen whether it gets the sort of momentum individuals believe it will," stated 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 detained in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK firms need to approach the market thoroughly, picking partners with caution and preventing missteps that could cause regulator backlash.

"This is a chance for the American sports betting gambler ... I'm unsure whether it is a chance for service," he states. "It truly is reliant on the result of [state] legislation and how the company operators pursue the opportunity."

'It will be collaborations'

As legalisation begins, sports betting wagering firms are lobbying to ward off high tax rates, in addition to requests by US sports betting leagues, which wish to gather a percentage of revenue as an "integrity fee".
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International companies deal with the added challenge of an effective existing video gaming industry, with casino operators, state-run lottos and Native American tribes that are looking for to safeguard their turf.

Analysts state UK firms will need to strike collaborations, using their expertise and innovation in order to make inroads.

They point to SBTech's current announcement that it is offering innovation for Kentucky Derby operator Churchill Downs as an example of the sort of deals likely to materialise.
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"It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The company has actually been investing in the US market given that 2011, when it acquired three US companies to develop an existence in Nevada.

William Hill now employs about 450 individuals in the US and has actually revealed partnerships with gambling establishments in Iowa and New Jersey.

It works as risk supervisor for the Delaware Lottery and has actually invested millions along with a regional developer in a New Jersey horse racing track.
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Mr Asher stated William Hill has actually become a family name in Nevada but that's not always the goal all over.

"We certainly plan to have an extremely considerable brand presence in New Jersey," he said. "In other states, it will simply depend on policy and potentially who our regional partner is."

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

US ruling opens method for sports betting