Australian James Gorman Has Been the CEO of Morgan Stanley Since 2010
Morgan Stanley cut its estimates of the U.S. online gambling industry almost in half from estimates it made in the fall of 2014. Just six months ago, Morgan Stanley believed the legal American online gambling industry would generate $5 billion in revenues each year by 2020. Now, that number has declined to $2.7 billion.
To explain the adjustment to their estimates, Morgan Stanley wrote, “We continue to believe that there is a material runway for growth, but results have been disappointing. Legislative processes continue to be slow as lawmakers remain unconvinced that online gaming is currently worth the hassle for limited tax revenue.”
Predicts 15 States Will Have iGaming
The company still believes the U.S. online gambling industry will include 15 states by the year 2020. It predicts that that next states to join Nevada, New Jersey, and Delaware will be Pennsylvania, California, New York, and Illinois. Those represent some of the largest population centers in the United States. If those four states joined, it would boost the industry’s yearly revenues by an order of magnitude.
Those are not the only states considering adding online gambling. In 2015 alone, legislators in the states of Washington, Indiana, and Mississippi have discussed the passage of online gambling bills. In each case, the initiative never got to the floor of the assembly or senate. A great deal of work will have to be done in each state for laws to pass.
RAWA Vote Still Looms
Meanwhile, an effort to ban online gambling in the U.S. Congress has to be defeated. If not, all the state initiatives won’t matter. Linsdey Graham and Jason Chaffetz continue to champion Restore America’s Wire Act, which would ban iGaming in all 50 states.
Once Predicted $8 Billion
This is the second time the New York City-based financial institution has adjusted its predictions. In 2013, the company estimated the online and mobile gaming industry would bring in about $8 billion a year by 2020.
The reason for the dissipating numbers are twofold: disappointment in the existing industry and lack of progress on the legislative front. The numbers for New Jersey’s online gambling industry have been disappointing. Instead of making $1 billion per year the way Gov. Chris Christie predicted, the iGaming operations of New Jersey combined to make about $120 million in 2014–less than one-eighth of the predicted number.
Tough to Predict
Most gaming analysts had more sober predictions than Governor Christie, but the $120 million predicted is still less than half of the $250 million estimated by the least optimistic sources.
It should be noted that analysts still see the numbers growing into the $200 million to $250 million per year range, because of better success rates on payment methods, the possible inclusion of PokerStars into the market, and possible expansion through interstate poker compacts with Nevada or even the United Kingdom. New Jersey’s gaming industry still shows signs of growth, though it will never be in the range of $1 billion a year.
Results Disappointing So Far
On the other hand, the Internet gaming industries of Nevada and Delaware have been nothing short of dismal. Nevada’s land-based gaming companies are focused on drawing customers to their resorts. They have always had an ambivalent attitude towards online gambling at best, because they see casinos and poker sites on the Internet as possible competition. Though 187 brick-and-mortar casinos exist in Nevada, only one or two of those launched online gaming portals, and only one of those is still operational.
Delaware’s online gambling industry has suffered from a lack of players. With the 45th-largest population among US states, Delaware’s poker communities never were going to succeed without an interstate gaming compact. A poker compact exists with Nevada, but Delaware and Nevada need more states to legalize gambling and join their compact before it becomes a serious force in the industry. Without such a boost, the websites operated by Dover Downs, Harrington Racecourse, and Delaware Park have had lackluster performances.
