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Morgan Stanley Revise US Online Gambling Revenues

Financial reports…the words make me shudder.

Lao Tzu, the sixth century BC Chinese poet, once said, “Those who have knowledge, don’t predict. Those who predict, don’t have knowledge.”

If you’re a fan of sixth century poets, then perhaps you should take Morgan Stanley’s US online gambling revenue forecasts with a pinch of salt?

The financial powerhouse has recently penned a 22-page report cutting US online gambling market estimates quite drastically. The new figures show a drop from $3.5bn to $1.3bn by the time 2017 rolls into town, and another drop from $8bn to $5bn in 2020.

To be fair to Morgan Stanley, the current performance of iGaming revenue in the three regulated states doesn’t produce a tingle in the belly, and their assessment of the current levels of growth as “underwhelming” are on the mark.

Despite the falling numbers, the reports indicate that Morgan Stanley remains bullish on the long-term opportunities for US online gambling once the technical and awareness issues are finally put to bed. Issues, the financial specialists said, that lead to “a stubbornly slow market ramp and legislative process.”

Talking about legislative process, and the report bears no mention of any federal ruling over iGaming in the next five years, and instead focuses on the current state-by-state trend that has kick-started the revolution.

The forecast indicates there will be seven states live by 2017, and 20 by the end of 2020. With the exception of California, Pennsylvania, New York and Illinois, the rest of the cast seem to be hiding on a memo that failed to reach the desk of the person who wrote this report.

Writing in the California Gambler, intrepid reporter Steve Ruddock cites Colorado, Iowa, Massachusetts, Mississippi, West Virginia, Maryland, Hawaii, and Washington as potential candidates, but even that little wizard is left scratching his head as to what other states will be opening their cyber doors.

New Jersey

Morgan Stanley has had to rely heavily on the performance of the current three states (New Jersey in particular) for their predictions of the future.

Here are the revised revenue forecasts for the Garden State.

NJ Online Gaming Forecast

2014 – $127m

2015 – $203m

2016 – $355m

2017 – $507m

PokerStars are still being hailed as the savior, and Morgan Stanley point to the Red Spade’s entrance into the Italian market as a potential indicator of the possibilities of a New Jersey impact.

In March 2009, the Italian online poker market was worth €178m. PokerStars enter, and that figures rises 62% to €288m, with half of that lolly being earned by Stars, showing that the presence of the online poker giant created extra earning potential for their competitors also.

The above figures are primarily based on the $73m of online gaming revenue earned this year, with a 3% growth month-on-month for the rest of the year. Morgan Stanley is predicting that PokerStars will enter the NJ market in January 2015, three months after Senator Ray Lesniak predicts.


The report believes an online poker bill will be passed in California some time during 2015, with the market opening up in 2016. The current 80/20 casino/poker revenue split in New Jersey has made them more cautious over the prospects for the poker-only offering out of CA.

The assumption is that PokerStars will ride into New Jersey, show the whole world how ‘this shit is done,’ and California will start thinking that bad actors are not that bad after all.

A $260m market is assumed in 2016, growing to $610m by 2020. These figures have dropped quite significantly from $435m & $1.2bn.

CA Online Gaming Forecast

2016 – $261m

2017 – $348m

2018 – $435m

2019 – $522m

2020 – $610m


The inclusion of Illinois is forecast to be 2017 after legislation is passed in 2016. Morgan Stanley forecast $177m in the first year, and $607m by 2020. This assumes that Illinois will go the whole nine yards and introduce a total iGaming experience into the state, and not just online poker.


A similar thought process is attached to the fate of Pennsylvania. Morgan Stanley predicts that a bill will be passed in 2016, and money will start rolling in during 2017. They believe it will earn $58m in its first year as an online poker-only operation, rising to $253m by 2020 with a full online casino implemented in the third year of operation.

So there you have it.

The art of saying what will happen, now we wait another few years for the explanation as to why it never did.



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Lee Davy

Life can be viewed as the sum of the parts or the parts themselves. I believe in the holistic view of life, or the sum. When dealing with individual parts you develop whack-a-mole syndrome; each time you clobber one problem with your hammer another one just pops up.