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UK Betting Firms Gamble on uS After Sports Wager Ruling

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UK wagering companies gamble on US after sports wager ruling

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


From Tuesday, brand-new rules on wagering came into effect in Delaware, a tiny east coast state about two hours from Washington.


Neighbouring New Jersey could start accepting sports bets as early as Friday.

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


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


For UK firms, which are coming to grips with consolidation, increased online competitors and tougher guidelines from UK regulators, the timing is especially appropriate.


Why the betting market deals with an unsure future


How does prohibited sports betting work and what are the fears?


But the market says relying on the US remains a dangerous bet, as UK business face complicated state-by-state regulation and competition from established local interests.

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"It's something that we're actually concentrating on, however equally we don't wish to overhype it," stated James Midmer, spokesperson at Paddy Power Betfair, which just recently bought the US dream sports site FanDuel.


'Take some time'


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


Firms are wishing to use more of that activity after last month's decision, which overruled a 1992 federal law that barred states outside of Nevada and a few others from authorising sports wagering.

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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 concern to regional lawmakers.


That is anticipated to cause considerable variation in how companies get licensed, where sports wagering can occur, and which occasions are open to speculation - with huge ramifications for the size of the market.


Potential income ranges from $4.2 bn to nearly $20bn every year depending upon factors like the number of states transfer 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'", said Will Hawkley, London-based head of leisure for consultants KPMG.


Now, he said: "I think the majority of people ... are taking a look at this as, 'it's a chance however 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, forecasts that 32 states will legalise sports betting in some kind by 2023, producing a market with about $6bn in annual earnings.


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


US laws limited betting mostly to Native American lands and Nevada's Las Vegas strip up until reasonably just 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 sluggish to legalise lots of forms of online gaming, regardless of a 2011 Justice Department opinion that appeared to remove challenges.


While sports betting is usually viewed in its own classification, "it plainly stays to be seen whether it gets the kind of momentum people think it will," said Keith Miller, law teacher at Drake University and co-author of a book about sports betting regulation.


David Carruthers is the previous chief executive of BetonSports, who was arrested in the US in 2006 for running an overseas online sportsbook and served jail time.


Now an expert, he says UK companies must approach the marketplace carefully, selecting partners with caution and avoiding bad moves that might result in regulator reaction.


"This is an opportunity for the American sports bettor ... I'm uncertain whether it is a chance for organization," he states. "It truly is dependent on the result of [state] legislation and how business operators pursue the opportunity."


'It will be collaborations'


As legalisation begins, sports betting wagering companies are lobbying to fend off high tax rates, in addition to demands by US sports leagues, which desire to collect a percentage of income as an "integrity charge".


International companies deal with the included difficulty of a powerful existing gaming market, with gambling establishment operators, state-run lottos and Native American tribes that are seeking to defend their turf.


Analysts state UK companies will need to strike collaborations, providing their expertise and technology in order to make inroads.


They indicate SBTech's current statement that it is offering innovation 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 everybody, but it will be partnerships and it will be driven by innovation," Mr Hawkley stated.


'It will just depend'


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


The company has actually been buying the US market because 2011, when it purchased three US firms to develop a presence in Nevada.


William Hill now employs about 450 people in the US and has actually announced partnerships with casinos in Iowa and New Jersey.

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It works as risk supervisor for the Delaware Lottery and has invested millions together with a regional 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 objective everywhere.


"We certainly mean to have a really significant brand name presence in New Jersey," he said. "In other states, it will just depend on policy and potentially who our regional partner is."


"The US is going to be the biggest sports wagering market on the planet," he included. "Obviously that's not going to occur on the first day."

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