20 states predicted to implement regulated online gambling by 2020

If all 50 states became regulated and were included in the estimates, the U.S. online gambling market would be worth double that total at USD 10.7 billion. The USD 5.2 billion estimate comes in lower than Morgan Stanley's previous report that projected revenue in the range of USD 8 billion.

PokerStars' Impact in New Jersey

Those insights are gleaned from the fact that all three states have produced rather lackluster revenue results in comparison to projections made prior to launch. However, better days appear to be on the horizon, as Morgan Stanley believes PokerStars will have a tremendous impact on the New Jersey market.

Based partially on the performance of PokerStars following the industry giant's entry into the Italian market in 2009, Morgan Stanley sees revenue in New Jersey growing 60% year-on-year after gaming regulators give their approval as expected. The market in Italy boomed 62% due to PokerStars' inclusion.

The report makes mention of the fact that PokerStars' entry into the marketplace in Italy is only one example, however, analysts "believe it portends well for the potential impact PokerStars could have on the NJ market, especially if it begins to convert some of its users to casino games (which are much more profitable)."

That projected spike in revenue in the Garden State may cause other states to rethink their online gambling regulation leanings. Should PokerStars indeed be responsible for New Jersey revenue to skyrocket as Morgan Stanley suggests, other states may be more inclined to get in on the action. That inclination would likely permit PokerStars to rid itself of the "bad actor"label.

The Projected 20 States

Online poker players in the U.S. who hold out hope that their state will soon enact igaming legislation are in for a disappointment, according to the report. Morgan Stanley envisions only the golden state of California passing online poker legislation in 2015, with a launch taking place the following year.

Next in line to join the online poker and gambling party will likely be New York, Illinois and Pennsylvania in 2016 with market grand openings in 2017. While those three states are launching, Morgan Stanley believes there is a good chance that the legislatures in Colorado, Massachusetts and Iowa finally approve igaming regulations of their own and invite players within their states to place online wagers in 2018.

The next handful of states most likely to climb aboard include Michigan, Maryland, Ohio, Connecticut and Florida. And by 2020, Morgan Stanley believes that regulation may find its way to Louisiana, Rhode Island, Missouri, West Virginia and Mississippi.

The report points to the fact that casinos, run by either Indian tribes or commercial interests, are currently found in only 39 states. Its projections take this into account under the assumption that states without casinos would be less likely to enact Internet gambling statutes.

Also a factor in Morgan Stanley's estimates is the unlikelihood that federal lawmakers will ever see clear to approving online gambling legislation that would provide blanket regulation on an opt in basis.

Still Not Enough States

The report's findings and projections, while certainly interesting and plausible, are merely estimates that may change substantially as time moves on. Whether 20 regulated states in six years is a lot or a little is a matter for debate. It's a lot considering only three states are currently regulated, and a little when realizing that it represents only 40% of the entire U.S.

If the report should ring true, there will be far too many players in far too many states who won't have the safeguards and protections that regulation guarantees. And the players who do reside in states that eventually enact online poker legislation are seemingly still in for a long wait.