Morgan Stanley Cuts U.S. Online Gambling Forecasts By Almost Half
The current state of online gambling in the U.S. is a far cry from what supporters of legalization predicted. The likes of Gov. Chris Christie was not shy to throw out estimates of $1 billion when asked what the value of the New Jersey online gambling market could be worth.
The cold reality of the situation is that all three states in which online gambling is legal only generated about $135 million combined last year which is way under the initial $678 million forecast. Not too long ago Morgan Stanley estimated the U.S. online gambling market to be worth 45 billion by 2020. Their latest forecast is almost half of that as they now released a report stating that the value is closer to $2.7 billion.
The report states that there are no states likely to legalize online gambling in 2015 but the good news is that big markets like California, New York,Pennsylvania and Illinois are expected to do so in the next few years.The firm said, “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.”
Some of the reasons cited in the report for the poor performance include illegal offshore online betting, technological difficulties with geolocation software and even poor advertising.
The possibility of a Federal ban on internet gambling is also not ruled out as the company wrote,” We believe a federal ban of online gaming is unlikely given legislators’ split views. However, a recent hearing in a House Judiciary subcommittee on (U.S. Rep.) Jason Chaffetz’s proposal for a ban suggests it could be gaining momentum. While the bill may advance out of committee, we believe it faces long odds of passing, especially without carve-outs for online lotteries and existing online gaming states.”