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firms gamble on US after sports betting wager judgment

5 June 2018
bet9ja.com
By Natalie Sherman

Business press reporter, New York

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

From Tuesday, new rules on sports betting entered into result in Delaware, a small east coast state about two hours from Washington.

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

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

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

For UK firms, which are grappling with debt consolidation, increased online competition and harder guidelines from UK regulators, the timing is especially opportune.

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But the market states relying on the US remains a risky bet, as UK business deal with complicated state-by-state regulation and competition from entrenched local interests.

"It's something that we're actually concentrating on, but equally we don't want to overhype it," stated James Midmer, representative at Paddy Power Betfair, which recently purchased the US dream sports betting website FanDuel.

'Require time'

The US accounted for about 23% of the world's $244bn (₤ 182bn) in video gaming income in 2015, according to a report by Technavio, external published in January.

Firms are wishing 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 discovered the law was an over-reach of federal power. But the court it did not actually legalise sports betting, leaving that question to local lawmakers.

That is expected to cause considerable variation in how firms get licensed, where sports betting can take place, and which events are open to speculation - with big ramifications for the size of the marketplace.

Potential revenue varieties from $4.2 bn to practically $20bn each year depending upon elements like the number of states move to legalise, Oxford Economics approximated in a 2017 research study for the American Gaming Association.

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

Now, he said: "I think a lot of individuals ... 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 require time'."

'Remains to be seen"

Chris Grove, managing director at Eilers & Krejcik Gaming, predicts that 32 states will legalise sports betting wagering in some kind by 2023, producing a market with about $6bn in yearly profits.

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

US laws minimal gambling mainly to Native American lands and Nevada's Las Vegas strip till fairly recently.

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

States have likewise been slow to legalise lots of forms of online gambling, despite a 2011 Justice Department opinion that appeared to get rid of barriers.

While sports betting is usually viewed in its own classification, "it clearly stays to be seen whether it gets the type of momentum people 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 detained in the US in 2006 for running an overseas online sportsbook and served prison time.

Now an expert, he states UK companies must approach the market carefully, picking partners with caution and preventing bad moves that could cause regulator reaction.

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

'It will be partnerships'

As legalisation starts, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports betting leagues, which want to collect a portion of revenue as an "integrity cost".

International business face the added difficulty of a powerful existing gaming industry, with casino operators, state-run lotteries and Native American people that are seeking to safeguard their turf.

Analysts say UK firms will require to strike collaborations, offering their competence and innovation in order to make inroads.

They indicate SBTech's recent announcement that it is offering innovation 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, but it will be collaborations and it will be driven by technology," Mr Hawkley said.

'It will simply depend'

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

The business has actually been buying the US market because 2011, when it bought three US companies to develop a presence in Nevada.

William Hill now utilizes about 450 individuals in the US and has actually announced collaborations with gambling establishments in Iowa and New Jersey.

It works as risk supervisor 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 always the goal everywhere.

"We certainly plan 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 most significant sports betting wagering market in the world," he included. "Obviously that's not going to occur on day one."

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