Morgan Stanley Reduces U.S. Online Gaming Projections by 30%

Morgan Stanley originally predicted that the United States online gambling industry would be worth $5 billion by 2015. The company recently cut its predictions by 30% to $3.5 billion.

Morgan Stanley still expects the online gambling market will grow strongly over the first few years. Analysts said that there is clearly strong demand for regulated online gambling. However, they found the technical problems in New Jersey, Nevada and Delaware were worse than they initially predicted. Other states that legalize online gambling will likely face technical issues that will temper early stage growth as well. However, the industry will probably gain traction in the near future.

Morgan Stanley has reduced its estimates for New Jersey's online gambling industry more significantly. They originally predicted that Atlantic City would generate $541 million in the first year, but revised that estimate to $203 million. The report clarified that the revision was primarily due to issues with the geolocation software and payment processing problems that players encountered. However, analysts feel that these problems will be resolved over the next year. Morgan Stanley believes that the industry will thrive over the long-term.

Morgan Stanley believes that California may legalize online gambling in 2014. They mentioned that four other states are also considering online gambling bills, but is doubtful that they will be enacted.

Other financial companies are sticking to their original predictions, which were initially set lower than Morgan Stanley's. Fitch Ratings predicted that New Jersey would generate $200 million from online gambling in the first year. The company is standing by its initial estimates. Fitch has also increased its online gambling estimates for Nevada and Delaware, stating that the online gaming compact as a key factor.