Morgan Stanley Forecasts 17% Annual Growth for US Online Gaming Revenue through 2026

Morgan Stanley Presents US Gambling Industry Outlook for 2023-2026

Global investment bank and wealth management firm, Morgan Stanley, has released its outlook for the US gambling industry at the beginning of the year. The firm highlighted the consumer discretionary sector as the “single highest growth opportunity” with a projected 17% compound annual growth rate (CAGR) in online revenue for 2023-2026.

However, the firm also acknowledged that the slow legislative processes in 2024 and 2025 could temper the assumptions for the online casino world, leading to a leveling off of the excellent growth seen in previous years.

Morgan Stanley’s analysis resulted in the rescheduling of launch dates for various online sports betting and casino markets. States like North Carolina, Maryland, Colorado, Indiana, and Iowa saw adjustments in their launch dates, while the effects of these changes were reflected in the firm’s sports betting Total Addressable Market forecasts for 2024, 2025, and 2026.

The prestigious analysts also predicted that the current spending levels on sports betting in the US could potentially meet and exceed those of mature markets, such as the UK and Australia. In terms of preferred stocks, Morgan Stanley mentioned DraftKings as one of its “most preferred overweights” due to their $40 share price target, while Las Vegas Sands and newcomer Fanatics were also highlighted.

The firm also expects reputable leaders in the market, such as FanDuel and DraftKings, to maintain their positions through harnessing their scale advantages to dominate their competitors. Additionally, the competitive landscape was analyzed, with established companies like Flutter and DraftKings facing challenges from newcomers like Fanatics, bet365, and ESPN Bet.

In October, Gateway Casinos enlisted Morgan Stanley’s financial services, along with those of Macquarie Group Ltd., to find the right investors or acquirers for its properties, including the Grand Villa Casino.

Overall, Morgan Stanley’s outlook provides valuable insights into the expected trends and developments in the US gambling industry for the next few years.