Analysts at Morgan Stanley have been gazing into the future of regulated American online gambling and they didn’t particularly like what they saw.

Yesterday, the financial giant slashed its prediction for US online gambling growth through 2020 by by more than half. The company suggests that the budding industry will only do about $2.7 billion (USD) during that period. That’s down from a much rosier estimate of $5 billion.

Morgan Stanley also cut the industry’s projected 2017 earnings to just $410 million, a far cry from their original prediction of $1.3 billion.

So what’s at the heart of Morgan Stanley’s big slash?

The Morgan Stanley report, as reported on by the Associated Press, rattles off a laundry list of challenges facing the industry including: payment processing issues; poor advertising; and offshore competition.

In the report analysts suggest that the future may be brighter, but that good news is still in the future saying:

We continue to believe that there is a material runway for growth, but results have been disappointing…Legislative processes continue to be slow as lawmakers remain unconvinced that online gaming is currently worth the hassle for limited tax revenue.

Slow as that growth may be, Morgan Stanley predicts that as many as 15 US States will have passed legislation permitting online gambling in the years to come. They specifically point to California, Pennsylvania, New York and Illinois as likely candidates for regulated online gambling.

One thing Morgan Stanley doesn’t seem too worried about is the prospect of a Federal ban on online gambling. They point out that political in-fighting and pressure from gambling states will stop RAWA in its tracks.

Morgan’s findings aren’t all that surprising to anyone who has been following the snail’s pace of regulated stateside online gambling. What remains to be seen is whether or not that pace will pick up in the years ahead.

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