Sports betting will become a huge business, Morgan Stanley says

Morgan Stanley has predicted that sports betting will pay off handsomely for casinos in the next few years, the New York Post reports.

In what it calls a bull-case scenario that bookies could only dream of, the average US adult would lose $43.50 a year betting on sports, which is broadly in line with figures in Europe and Australia, where sports betting is legal, Morgan Stanley says.

That $216 billion would result in $11 billion in revenue for the casino operators, Morgan Stanley says. That revenue figure would be equal to last year’s North American movie box office sales.

Part of the reason MGM Resorts, or any other operator, would buy Caesars Entertainment is that Caesars owns 49 casinos across 13 states, making it one of the bigger beneficiaries from legalized sports betting. Caesars is forecast to have a 9 percent sports betting market share, Morgan Stanley says.

The Supreme Court in May struck down a federal ban on sports betting, and now each state is deciding whether to legalize the activity.

States that legalize are expected to issue gaming licenses to those already operating within their borders.

“I see sports betting as fuel for consolidating everyone,” Chris Grove, a managing director at Eilers & Krejcik Gaming told The Post, making regional operators more valuable.

Morgan Stanley on Oct. 23 moved its call on Caesars to overweight, citing the benefits of sports betting, and last week upgraded sports bookmaker William Hill to overweight.

Its bull-case forecast assumes all states legalize sports betting.

Grove said that the early New Jersey sports betting numbers indicate that Morgan Stanley’s bullish projections (as well as his own) could come true.