Investment firm Morgan Stanley lowered its estimate of the U.S. Internet gambling market to $3.5 billion by 2017, down from a previous forecast of $5 billion.
It cited worse-than-expected technical issues in its projection, but said it’s optimistic about the new industry’s long-term prospects. It forecast an $8 billion market by 2020 compared with its initial $9.3 billion estimate.
“While we remain bullish on the online gaming opportunity in the U.S., we are lowering our estimates to better reflect the insights we have gained following the first few months of operations in New Jersey, Nevada and Delaware,” the company wrote in a research note.
It also lowered its first full-year estimate of New Jersey’s Internet gambling revenue from $541 million to $203 million, citing continuing issues with technology designed to ensure that players are within New Jersey’s borders, and payment processing options for players. The company said it believes those issues will be resolved over time, but added it is reducing its month-to-month growth estimate for New Jersey to 10 percent instead of 20 percent for the remainder of this year. Fitch Ratings is sticking with its $200 million forecast for this year.
Morgan Stanley also said it sees the possibility of California and Illinois legalizing Internet gambling this year. But it said it does not expect five other states — Colorado, Louisiana, Massachusetts, Mississippi and Ohio — to do so this year.
New Jersey began offering Internet gambling in late November. Online operations have taken in $19.7 million the first two months of this year.
— Associated Press