In states that do legalize iGaming, we expect revenue to be around double [that of] sports betting.Morgan Stanley analysts project US online casino revenue would reach $7.8 billion in 2025 if four states — Colorado, Illinois, Indiana, and Iowa – expanded gaming in their states to include iGaming and opened online casino markets in the next two years.
If the four states launched online casino gaming in 2024, gross gaming revenue would total $6.7 billion, the analysts said in a 114-page report, US Sports Betting & Online Gambling Primer 3.0, which was released in May. That’s an increase from an estimate of $4.5 billion in 2023, but with only seven states with legal iGaming.
The report further estimated that iGaming revenue would reach $8.4 billion in 2026, $9.1 billion in 2027, and $9.7 billion in 2028.
Online Casino Revenue Was Disappointment in Early States
Online casino gaming has grown slowly since legalization in 2011, which happened after the Obama DOJ ruled that the federal Wire Act applied only to sports betting. Delaware, New Jersey, and Nevada were the first three states to launch online casinos.
“At first, state revenues disappointed, dis-incentivizing other states from legalizing,” wrote Morgan Stanley Analysts Thomas Allen, Ed Young, and Nick DeValeria. But four states eventually did: Connecticut, Michigan, Pennsylvania, and West Virginia.
The Morgan Stanley analysts said their prediction for which states appear to be the next ones to offer online casino gaming is “based on states that have shown interest to date.”
“We assume fewer (11) states [will] legalize iGaming than sports betting (42), given less public and industry support, louder industry opponents, and the slow rollout to date,” the analysts wrote. “However, in states that do legalize iGaming, we expect revenue to be around double [that of] sports betting.”
Illinois Figures to Become an iGaming Powerhouse
Assuming the four states do legalize online casino gaming, the Morgan Stanley analysts seem to have a pretty good idea of where they would rank — both among each other and the other seven iGaming states. They issued gross gaming revenue forecasts for 11 states, including the seven where iGaming is currently legal.
Illinois figures to have about twice the amount of gross gaming revenue as neighboring Indiana, while Iowa is projected to be about half the size of Indiana. The analysts estimate that Colorado will be third overall among the newcomers, just slightly below the revenue expected from Indiana.
In its projection where iGaming revenue hits $7.8 billion in 2025, Morgan Stanley expects Illinois to account for $1.3 billion of the total. That would make the Prairie State the fourth-highest state in terms of revenue, behind Michigan, New Jersey, and Pennsylvania — analysts projected each would gross nearly $1.5 billion in 2025.
Indiana is projected to have $653 million in iGaming revenue in 2025, while Colorado is forecast to have $509 million and Iowa, $358 million.
US iGaming Market Could Be $9.7 Billion in 2028
Perhaps more impressive is the revenue forecast that Morgan Stanley calculated for 2028 — a full decade removed from 2018, the last year there were only three legal states for iGaming.
Morgan Stanley projects gross gaming revenue from iGaming will reach $9.7 billion in 2028, a 31-fold increase from 2018 ($308 million). Under that scenario, Michigan would lead in revenue with $1.9 billion. Illinois would be slightly ahead of New Jersey and Pennsylvania, but each would account for about $1.7 billion in revenue.
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