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firms gamble on US after sports betting wager judgment
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5 June 2018

By Natalie Sherman

Business reporter, New york city

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

From Tuesday, brand-new guidelines on sports betting came into result in Delaware, a tiny 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 way for states to enable sports betting.

The industry sees a "as soon as in a generation" chance to establish 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 consolidation, increased online competitors and tougher rules from UK regulators, the timing is especially suitable.
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But the industry states counting on the US remains a dangerous bet, as UK companies face complex state-by-state policy and competitors from entrenched regional interests.

"It's something that we're truly concentrating on, however equally we don't desire to overhype it," said James Midmer, spokesman at Paddy Power Betfair, which just recently acquired the US fantasy sports betting website FanDuel.

'Take time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming revenue last year, according to a report by Technavio, external released in January.

Firms are hoping to tap into more of that activity after last month's choice, which struck down a 1992 federal law that disallowed 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 really legalise sports betting, leaving that question to regional lawmakers.

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

Potential revenue ranges from $4.2 bn to nearly $20bn every year depending upon factors like the number of states relocate to legalise, Oxford Economics estimated 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.

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

'Remains to be seen"

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

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

US laws restricted gambling mostly to Native American lands and Nevada's Las Vegas strip until relatively recently.

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

States have likewise been slow 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 usually seen in its own classification, "it plainly remains to be seen whether it gets the type of momentum people believe it will," stated 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 arrested in the US in 2006 for running an offshore online sportsbook and served jail time.

Now a specialist, he says UK firms ought to approach the marketplace carefully, selecting partners with care and avoiding bad moves that might cause regulator backlash.

"This is an opportunity for the American sports betting wagerer ... I'm unsure whether it is an opportunity for service," he says. "It actually is dependent on the result 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 want to gather a percentage of revenue as an "integrity charge".
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International business deal with the included difficulty of an effective existing gaming market, with gambling establishment operators, state-run lotteries and Native American people that are looking for to protect their grass.

Analysts say UK firms will require to strike partnerships, providing their know-how and technology in order to make inroads.

They point to SBTech's current announcement that it is offering technology for Kentucky Derby operator Churchill Downs as an example of the type 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 truths.

The business has been purchasing the US market considering that 2011, when it purchased 3 US firms to establish an existence in Nevada.

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

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

Mr Asher stated William Hill has ended up being a family name in Nevada but that's not necessarily the goal all over.

"We definitely intend to have a very substantial brand presence in New Jersey," he said. "In other states, it will simply depend on regulation and potentially who our local partner is."

"The US is going to be the most significant sports betting market on the planet," he added. "Obviously that's not going to take place on day one."

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