Morgan Stanley logoMorgan Stanley Predicts California Will Legalize Online Poker In 2015

A research report issued by Morgan Stanley predicts that online poker in California will be legalized in 2015. The 22 page analysis provides an in-depth look into the US online gambling market and backs up the view that the progress made between gambling interests in the Golden State could soon foster a passable bill.

The report highlights the two main sticking points which led to the failure of the most recent bills brought by Lou Correa and Reginald Jones-Sawyer: “bad actor” language and the inclusion of horseracing operators in the industry. It notes that the acquisition of PokerStars by Amaya Gaming, and the site’s partnership with the Morongo tribe, has led to many industry players softening their stance on the issue.

Morgan Stanley analysts believe that if allowed into the industry, horseracing tracks wouldn’t garner much of a share in the market, and due to the political influence they wield, would be absolutely necessary to get a bill passed. For those reasons, they see no reason why they would not be allowed to operate their own poker rooms online.

With those considerations in mind, the report concludes that the state will legalize iPoker in 2015 and go live by 2016.

Revenue predictions

In terms of revenue, the authors estimate the Golden State market will be worth around $260 million in 2016, increasing to $610 million by 2020. Analysts had initially projected higher figures, but adjusted their predictions downward after seeing an 80/20 split between casino and poker revenue in New Jersey. A California online gambling bill will assuredly be poker-only and will not allow for more profitable casino table games to be offered.

The PokerStars Effect

The report also highlighted the huge effect that the entrance of PokerStars into the US could have on the market. While not able to use statistics provided directly by the company itself, as it was previously privately traded, analysts studied the Italian market for an estimation on what could be expected.

What they found was astounding: after one year of operation in the country, the site single-handedly increased the entire market by 62%. Those figures “should also be a positive indicator for CA tribes as it highlights that PokerStars’ entrance expanded the opportunity for competitors too,” the report pointed out.

The research is something which tribes who are fighting tooth and nail to keep PokerStars out of California should take into consideration. Are they willing to give up being the big fish in a tiny pond to be a small fish in an ocean?