UK wagering companies gamble 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 wagering starts to spread in America.

From Tuesday, new rules on wagering came into impact in Delaware, a small east coast state about two hours from Washington.

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

The changes are the first in what might end up being a wave of legalisation after the Supreme Court last month cleared the method for states to permit sports betting wagering.

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

For UK companies, which are grappling with combination, increased online competitors and harder guidelines from UK regulators, the timing is particularly opportune.

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But the market states depending on the US stays a risky bet, as UK companies deal with complex state-by-state policy and competition from entrenched local interests.

"It's something that we're really focusing on, however similarly we do not wish to overhype it," said James Midmer, spokesperson at Paddy Power Betfair, which recently purchased the US fantasy sports betting site FanDuel.

'Require 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.
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Firms are wishing to take advantage of more of that activity after last month's choice, which overruled a 1992 federal law that disallowed states beyond Nevada and a couple of others from authorising sports betting.

The ruling discovered the law was an over-reach of . But the court it did not really legalise sports betting wagering, leaving that question to regional lawmakers.

That is expected to cause considerable variation in how companies get certified, where sports betting can occur, and which events are open to speculation - with huge implications for the size of the market.

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

"There was a great deal of 'this is going to be huge'", stated Will Hawkley, London-based head of leisure for consultants KPMG.

Now, he stated: "I think the majority of people ... are taking a look 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, managing director at Eilers & Krejcik Gaming, anticipates that 32 states will legalise sports betting wagering in some form by 2023, producing a market with about $6bn in annual earnings.

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

US laws limited sports betting mostly to Native American lands and Nevada's Las Vegas strip until fairly recently.

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

States have actually also been slow to legalise many kinds of online gambling, in spite of a 2011 Justice Department opinion that appeared to get rid of challenges.

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

David Carruthers is the previous president 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 companies need to approach the marketplace carefully, selecting partners with care and preventing bad moves that might lead to regulator reaction.

"This is a chance for the American sports betting bettor ... I'm not sure whether it is a chance for organization," he says. "It truly is dependent on the outcome of [state] legislation and how business operators pursue the opportunity."

'It will be partnerships'

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 profits as an "stability charge".

International companies deal with the included challenge 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 state UK firms will need to strike collaborations, using their knowledge and technology in order to make inroads.

They indicate SBTech's current announcement that it is supplying innovation for Kentucky Derby operator Churchill Downs as an example of the sort of offers 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 said.

'It will simply depend'

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

The company has been investing in the US market given that 2011, when it bought 3 US companies to establish an existence in Nevada.

William Hill now employs about 450 people in the US and has announced collaborations with gambling establishments in Iowa and New Jersey.

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

Mr Asher stated William Hill has actually become a household name in Nevada but that's not always the goal all over.

"We definitely mean to have a really substantial brand name existence in New Jersey," he stated. "In other states, it will simply depend upon guideline and potentially who our regional partner is."
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"The US is going to be the biggest sports betting wagering market worldwide," he added. "Obviously that's not going to happen on day one."

US ruling opens method for sports betting