Morgan Stanley Forecasts $5.2bn US iGambling Market By 2020

Home » Poker News » Morgan Stanley Forecasts $5.2bn US iGambling Market By 2020

Thursday, September 25th, 2014 | Written by Charles Washington

According to a recent report by Morgan Stanley, US online gambling could be a $5.2 billion industry by 2020 providing at least 20 more states join the three already regulated markets of Nevada, Delaware, and New Jersey. Nevertheless, the finance group’s prediction is lower than its previous estimate, and as a Morgan Stanley statement, explains:

“We cut our US online gaming market forecast to $1.3B in ’17 (prior $3.5B) and $5B in ’20 (prior $8B). Growth has underwhelmed, creating a ripple effect on new mkts/end-user demand. We downgrade BYD to EW based on lower value from online and less confidence in other bull drivers.”

Market could be even larger

The report also states that the USA’s potential iGaming market could even be worth as much as $10 billion if every state in the country decided to regulate their markets. Nevertheless, this scenario seems much less likely as presently just 39 of a total 50 states permit even commercial casinos in their jurisdictions.

A more realistic possibility might be that the US government approves some type of Federal legislation in the next six years, but once again there are no major indications that this is a path authorities are intent on following.

4000% industry growth?

Needless to say, that figure of a US iGaming industry worth $5.2 billion means the market would need to grow by a massive 4000% within the next six years.

Currently, New Jersey generates roughly $120 million each year in online gambling revenues, whilst Nevada collects around $12 million, and Delaware a mere $3 million, together totaling $135 million per annum. According to Morgan Stanley, this represents a small market with a great deal of potential, and the company’s estimate could be realized via exponential growth through Interstate online poker compacts and multi-state linked progressive slots.

Each state decides its iGaming offer

Another factor to determine the size of a future US iGaming market is what type of online gambling approach the different states choose to adopt.

California, for instance, is often cited as the potential ‘jewel in the crown’ of online poker, and while that is likely to be the case for the country’s most populous state, so far the ‘Golden State’ has expressed an interest in only offering online poker. Consequently, Morgan Stanley predicts that California’s market of 38 million people would then be worth $610 million by 2020, equivalent to that of a future Illinois online poker and casino games market (12.9 million people).

Furthermore, a number of other US states has thus far indicated interest in pursuing an online poker only approach, too, including Colorado, Iowa, Maryland, Pennsylvania and New York.

Interstate iPoker Compacts vital

Unlike casino games in which gamblers wager against the house, poker is played between peers making it important for sites to build larger poker communities in order to offer a viable range of cash games, tournaments, and prize pools regularly throughout the day.

Therefore, Interstate iPoker Compacts and poker networks are viewed as a vital component in developing an attractive environment for players, with the sites then able to operate efficiently and build upon themselves. Case in point, Delaware and Nevada have already signed a poker interstate agreement this year, and commenting on the landmark deal 888 CEO Brian Mattingley, whose company already operates in all three regulated Us states, said:

“This pooling compact will help 888 and its partners deliver a world-class gaming experience to poker players in Delaware and Nevada given we are the only operator live in both, vindicating our approach to launch in all regulating states.”

Adelson threatens to spoil party

Unfortunately, a number of factors threaten to spoil the country’s online gambling revival, not least the lobbying efforts of anti-online gambling groups such as Sheldon Adelson and his Coalition to Stop Internet Gambling. Senator Lindsey Graham (South Carolina) and Representative Jason Chaffetz (R-Utah), for instance, have introduced their Restoration of the Wire Act (RAWA) in both houses of the U.S. Congress in an attempt to impose their puritanical gambling views on the other 48 states in the USA.

If the Restoration of America’s Wire Act (RAWA) is eventually passed, then Morgan Stanley’s predicted $5.2 billion in annual iGambing revenues will no longer apply and hundreds of millions of dollars currently wagered on unregulated sites will continue to be funneled into the pockets of unlicensed grey market offshore operators.