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UK wagering companies gamble on US after sports betting wager ruling

5 June 2018

By Natalie Sherman
bit.ly
Business press reporter, New york city
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It’s high stakes for UK firms as sports betting wagering starts to spread out in America.

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

Neighbouring New Jersey could start 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 way for states to enable sports betting.

The industry sees a “as soon as in a generation” opportunity to establish a new market in sports betting-mad America, stated Dublin-based monetary expert David Jennings, who heads leisure research at Davy.

For UK firms, which are grappling with combination, increased online competition and tougher guidelines from UK regulators, the timing is especially .

Why the sports betting industry deals with an uncertain future

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But the market says counting on the US remains a dangerous bet, as UK business deal with complicated state-by-state policy and competitors from established local interests.

“It’s something that we’re really concentrating on, however similarly we do not wish to overhype it,” said James Midmer, spokesperson at Paddy Power Betfair, which just recently purchased the US dream sports betting website FanDuel.

‘Require time’

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

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

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

That is expected to cause substantial variation in how companies get certified, where sports betting wagering can happen, and which events are open to speculation - with big implications for the size of the marketplace.

Potential earnings ranges from $4.2 bn to nearly $20bn each year depending on aspects like how many states transfer to legalise, Oxford Economics approximated 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 experts KPMG.
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Now, he stated: “I think most people … are looking 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, anticipates that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly profits.

But bookmakers face a far different landscape in America than they perform in the UK, where wagering stores are a regular sight.

US laws limited gambling mostly to Native American lands and Nevada’s Las Vegas strip up until 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 slow to legalise numerous kinds of online sports betting, regardless of a 2011 Justice Department opinion that appeared to eliminate challenges.

While sports betting is generally seen in its own classification, “it plainly stays to be seen whether it gets the sort of momentum individuals believe 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 former chief executive of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.

Now a specialist, he states UK firms need to approach the marketplace carefully, selecting partners with caution and preventing missteps that could cause regulator reaction.

“This is an opportunity for the American sports betting wagerer … I’m uncertain whether it is a chance for business,” he states. “It actually depends on the result of [state] legislation and how the service operators pursue the opportunity.”

‘It will be collaborations’
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As legalisation begins, sports betting firms are lobbying to fend off high tax rates, as well as demands by US sports betting leagues, which want to gather a portion of earnings as an “integrity fee”.

International companies face the added obstacle of a powerful existing video gaming industry, with gambling establishment operators, state-run lotteries and Native American tribes that are seeking to protect their grass.

Analysts say UK companies will require to strike collaborations, providing their competence and technology in order to make inroads.

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

“It will be a win-win for everyone, however it will be collaborations and it will be driven by innovation,” Mr Hawkley said.

‘It will just depend’

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

The business has been buying the US market given that 2011, when it purchased 3 US companies to develop a presence in Nevada.

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

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

Mr Asher stated William Hill has become a household name in Nevada but that’s not necessarily the objective everywhere.

“We definitely mean to have an extremely considerable brand name existence in New Jersey,” he stated. “In other states, it will simply depend upon regulation and possibly who our regional partner is.”

“The US is going to be the biggest sports betting wagering market in the world,” he added. “Obviously that’s not going to happen on the first day.”

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