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UK wagering companies bet on US after sports betting wager judgment
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5 June 2018
By Natalie Sherman
Business reporter, New York
It's high stakes for UK companies as sports betting starts to spread in America.
From Tuesday, brand-new rules on sports betting entered impact in Delaware, a small east coast state about 2 hours from Washington.
Neighbouring New Jersey could begin accepting sports betting bets as early as Friday.
The changes are the first in what might become a wave of legalisation after the Supreme Court last month cleared the way for states to allow sports betting wagering.
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The industry sees a "when in a generation" chance to establish a new market in sports betting-mad America, said Dublin-based monetary analyst David Jennings, who heads leisure research at Davy.
For UK companies, which are facing consolidation, increased online competitors and harder rules from UK regulators, the timing is especially appropriate.
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But the industry says depending on the US stays a risky bet, as UK business deal with complicated state-by-state policy and competitors from entrenched local interests.
"It's something that we're really focusing on, but equally we don't want to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which recently bought the US fantasy sports betting website FanDuel.
'Take time'
The US represented about 23% of the world's $244bn (₤ 182bn) in gaming earnings in 2015, according to a report by Technavio, external published in January.
Firms are hoping to take advantage of more of that activity after last month's decision, which struck down a 1992 federal law that barred states beyond Nevada and a few others from authorising sports betting.
The ruling discovered the law was an over-reach of federal power. But the court it did not really legalise sports betting wagering, leaving that question to regional legislators.
That is expected to cause significant variation in how firms get accredited, where sports betting can happen, and which events are open to speculation - with huge implications for the size of the market.
Potential profits varieties from $4.2 bn to nearly $20bn every year depending on factors like the number of states relocate to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.
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"There was a lot of 'this is going to be huge'", said Will Hawkley, London-based head of leisure for experts KPMG.
Now, he said: "I think most individuals ... 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 some time'."
'Remains to be seen"
Chris Grove, handling director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting in some form by 2023, producing a market with about $6bn in annual profits.
But bookies face a far different landscape in America than they do in the UK, where sports betting shops are a frequent sight.
US laws limited gambling largely to Native American lands and Nevada's Las Vegas strip till relatively recently.
In the popular creativity, sports betting wagering has long been linked to a 1919 baseball World Series match-fixing scandal.
States have actually likewise been sluggish to legalise lots of kinds of online sports betting, despite a 2011 Justice Department opinion that appeared to eliminate barriers.
While sports betting is generally viewed in its own classification, "it plainly stays to be seen whether it gets the sort of momentum individuals believe it will," said Keith Miller, law professor at Drake University and co-author of a book about sports betting policy.
David Carruthers is the former president of BetonSports, who was jailed in the US in 2006 for running an offshore online sportsbook and served prison time.
Now an expert, he says UK firms ought to approach the market carefully, picking partners with caution and preventing mistakes that might result in regulator backlash.
"This is an opportunity for the American sports betting bettor ... I'm not sure whether it is a chance for business," he says. "It truly is reliant on the result of [state] legislation and how the service operators pursue the chance."
'It will be collaborations'
As legalisation begins, sports betting wagering companies are lobbying to ward off high tax rates, as well as requests by US sports betting leagues, which desire to gather a percentage of income as an "integrity charge".
International business deal with the added difficulty of a powerful existing video gaming market, with gambling establishment operators, state-run lottery games and Native American people that are looking for to safeguard their turf.
Analysts say UK companies will require to strike partnerships, using their proficiency and innovation in order to make inroads.
They indicate SBTech's current statement that it is supplying technology for Kentucky Derby operator Churchill Downs as an example of the type of deals most likely to materialise.
"It will be a win-win for everybody, however it will be partnerships and it will be driven by innovation," Mr Hawkley stated.
'It will just depend'
Joe Asher, primary executive at William Hill US, is clear-eyed about the realities.
The company has been buying the US market given that 2011, when it purchased three US companies to develop an existence in Nevada.
William Hill now employs about 450 people in the US and has announced partnerships with gambling establishments in Iowa and New Jersey.
It works as danger supervisor for the Delaware Lottery and has actually invested millions along with a local designer in a New Jersey horse racing track.
Mr Asher said William Hill has actually become a household name in Nevada however that's not necessarily the goal all over.
"We definitely mean to have an extremely considerable brand existence in New Jersey," he said. "In other states, it will just depend upon regulation and possibly who our local partner is."
"The US is going to be the greatest sports betting wagering market on the planet," he added. "Obviously that's not going to occur on day one."
More on this story
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UK Betting Firms Gamble on United States After Sports Wager Ruling
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