Why the US online gambling industry could be $5.2 billion by 2020


Nov. 20 2020, Updated 3:58 p.m. ET

Online gambling potential

According to a Morgan Stanley report, the U.S. online gambling industry could generate revenue of ~$5.2 billion by 2020. The report is based on the assumption that 20 more states would have their markets legalized by 2020. Currently, only Nevada, New Jersey, and Delaware have legal and licensed online gambling.

New Jersey collects ~$120 million in online gaming revenue each year. Nevada collects about one-tenth of New Jersey, or ~$12 million. Delaware collects ~$3 million per year. Combined, the three states collect ~$135 million per year.

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Nevada had challenges launching its market successfully. There are anti-online gambling campaigns in the state. The campaigns try to keep the monopoly of some casino operators like Las Vegas Sands (LVS). Other major casino operators in Nevada include MGM Resorts (MGM), Caesars Entertainment (CZR), and Wynn Resorts (WYNN).

Exchange-traded funds (or ETFs)—like the Consumer Discretionary Select Sector SPDR Fund (XLY)—help investors get exposure to these companies.

Morgan Stanley expects that exponential growth in the U.S. online gaming market could happen through interstate online poker and wide-area progressive slots. Also, Morgan Stanley predicts that California’s online poker market would be ~$610 million by 2020.

The new interstate online poker networks could stimulate faster growth. Nevada and Delaware are already working their interstate poker network. The network would allow residents from both states to play anywhere within the states’ limits. Large poker communities help the industry grow more. They push the government to bring an end to the casino monopoly and allow the online market to form a component of it.

Major challenge

Currently, the gambling states are fighting against the restoration of the Wire Act. It prohibits all forms of Internet gambling. If the Wire Act goes to Congress, it would end the online gambling industry in the U.S.

To learn about casino gaming click here.


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