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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 reporter, New york city

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

From Tuesday, new guidelines on wagering came into effect in Delaware, a small east coast state about 2 hours from Washington.

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

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

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

For UK companies, which are coming to grips with consolidation, increased online competition and tougher guidelines from UK regulators, the timing is especially suitable.

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

"It's something that we're truly focusing on, but equally we do not desire to overhype it," stated James Midmer, representative at Paddy Power Betfair, which just recently bought the US fantasy sports betting website FanDuel.

'Take some time'

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

Firms are wanting to tap into more of that activity after last month's decision, which overruled a 1992 federal law that barred states beyond 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 really legalise sports betting wagering, leaving that concern to local legislators.

That is expected to result in considerable variation in how firms get licensed, where sports betting wagering can occur, and which occasions are open to speculation - with big implications for the size of the marketplace.

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

Now, he said: "I think many individuals ... are looking 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 require time'."

'Remains to be seen"

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

But bookies deal with a far various landscape in America than they do in the UK, where sports betting shops are a frequent sight.

US laws minimal gaming mainly to Native American lands and Nevada's Las Vegas strip until reasonably 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 sluggish to legalise numerous types of online gambling, despite a 2011 Justice Department opinion that appeared to get rid of obstacles.

While sports betting wagering is normally seen in its own category, "it clearly stays to be seen whether it gets the kind 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 chief executive of BetonSports, who was apprehended in the US in 2006 for running an overseas online sportsbook and served prison time.

Now a consultant, he states UK firms should approach the marketplace thoroughly, selecting partners with care and preventing missteps that might cause regulator reaction.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is an opportunity for company," he states. "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 wagering firms are lobbying to fend off high tax rates, as well as requests by US sports betting leagues, which desire to collect a percentage of income as an "stability fee".

International business face the included difficulty of a powerful existing gaming industry, with casino operators, state-run lottery games and Native American people that are seeking to defend their grass.

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

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

"It will be a win-win for everybody, but it will be partnerships 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 company has actually been investing in the US market because 2011, when it purchased three US firms to establish an existence in Nevada.

William Hill now uses about 450 individuals in the US and has revealed partnerships with casinos in Iowa and New Jersey.

It works as threat supervisor for the Delaware Lottery and has actually invested millions together with a local designer in a New Jersey horse racing track.

Mr Asher stated William Hill has become a home name in Nevada however that's not necessarily the goal all over.

"We definitely mean to have a really substantial brand name presence in New Jersey," he said. "In other states, it will just depend on guideline and potentially who our regional partner is."

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

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