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Morgan Stanley’s growth forecast for the United States online gambling industry

04 April 2015

At a time when the industry is still trying to get on its feet, the financial services corporation Morgan Stanley has lowered its previous revenue estimates in terms of the United States’ online gaming and poker market.

The analysis of online gaming in the U. S. by Morgan Stanley has resulted in a reduction by nearly half. Back in 2013, the financial company estimated that the U. S. online gaming and poker market would total $5 billion dollars by 2020. With some results from the three states that have legalized online gaming and poker being, Nevada, New Jersey and Delaware as well as a view approach on the rest of the United States, Morgan Stanley analysts have lowered their expectations.

In their new report, Morgan Stanley believes that the U. S. online gaming and poker market will reach a respectable $2.7 billion dollars by 2020, but that is far beneath their original projections from 2013. The three states that have regulated online poker and gaming are a key indicator for Morgan Stanley to make their estimations. In 2014, those states had collective revenues amounting to $135 million dollars, far below the forecasted numbers by Morgan Stanley of $678 million dollars.

Several reasons can be justified and contributed for the low figures and Morgan Stanley takes these factors into consideration when making their projections. Challenges with payment processing, inadequate advertising, related issues with the geo-location technology employed by the states and the continued availability of offshore sites for U. S. players to play on, were all sited in their report as to justify reasoning for the low revenues. The analysts also discussed the ongoing political situation regarding online gaming and poker regulation and its future in the U. S.

“We continue to believe that there is a material runway for growth, but results have been disappointing,” Morgan Stanley wrote in their report. “Legislative processes continue to be slow as lawmakers remain unconvinced that online gaming is currently worth the input for limited tax revenues.” As to the current legislation in Washington, D. C. that would put a federal ban on the online gaming and poker industry, the analysts believe that its passage would be unlikely but that it is a threat to the burgeoning industry. “We believe a federal ban of online gaming is unlikely given legislators split views,” analysts advised.

In conclusion, the Morgan Stanley staff did have an optimistic outlook on the future of online gaming and poker in the U. S. By 2017, the analysts predict that revenues from the industry would be $410 million dollars (still down from previous estimates of $1.3 billion dollars), however with a rapid increase in more players in the game. Morgan Stanley predicts that 15 states will have passed some sort of regulation legislation – for online casino gaming, online poker or both – and that larger states would be the driving impetus in bringing smaller states into the game.

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