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UK sports betting companies bet on US after sports betting wager ruling
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5 June 2018
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It's high stakes for UK firms as sports betting starts to spread in America.

From Tuesday, new rules on sports betting entered into result in Delaware, a tiny 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 very 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.

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

For UK firms, which are facing consolidation, increased online competition and harder rules from UK regulators, the timing is particularly suitable.

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But the industry says relying on the US remains a risky bet, as UK business deal with complex state-by-state policy and competitors from entrenched regional interests.

"It's something that we're actually focusing on, however equally we do not wish to overhype it," said James Midmer, representative at Paddy Power Betfair, which recently acquired the US dream sports betting website FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in gaming earnings in 2015, according to a report by Technavio, external published in January.
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Firms are intending to tap into more of that activity after last month's choice, which struck down a 1992 federal law that barred states beyond Nevada and a couple of others from authorising sports betting .

The ruling found the law was an over-reach of federal power. But the court it did not in fact legalise sports betting wagering, leaving that concern to local legislators.

That is anticipated to cause considerable variation in how companies get licensed, where sports betting can take place, and which events are open to speculation - with huge ramifications for the size of the market.

Potential earnings ranges from $4.2 bn to practically $20bn every year depending on elements like how many states relocate 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'", said Will Hawkley, London-based head of leisure for experts KPMG.

Now, he stated: "I think the majority of 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 time'."

'Remains to be seen"

Chris Grove, handling director at Eilers & Krejcik Gaming, forecasts that 32 states will legalise sports betting wagering in some type by 2023, producing a market with about $6bn in annual revenue.

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

US laws limited gaming largely to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have actually also been sluggish to legalise numerous forms of online gaming, in spite of a 2011 Justice Department viewpoint that appeared to get rid of barriers.

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

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

Now an expert, he states UK firms must approach the market carefully, picking partners with care and preventing bad moves that could lead to regulator reaction.

"This is an opportunity for the American sports betting gambler ... I'm not sure whether it is a chance for organization," he states. "It really is reliant on the result of [state] legislation and how the organization operators pursue the chance."

'It will be partnerships'

As legalisation starts, sports betting firms are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which want to collect a percentage of income as an "stability cost".
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International companies deal with the included difficulty of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to defend their turf.

Analysts say UK firms will require to strike collaborations, using their knowledge and technology in order to make inroads.

They indicate SBTech's current statement that it is offering innovation 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 everyone, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.

'It will simply depend'

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

The business has actually been purchasing the US market considering that 2011, when it bought 3 US companies to establish a presence in Nevada.

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

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

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

"We definitely plan to have a very substantial brand name existence in New Jersey," he said. "In other states, it will simply depend upon guideline and potentially who our local partner is."
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"The US is going to be the most significant sports betting market in the world," he included. "Obviously that's not going to take place on day one."

US judgment opens way for sports betting wagering
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