Future of US egaming industry "ominous", says report
Eilers Research says state-by-state regulation, over-estimating the market, and other forms of online gaming are hampering the sector
The outlook for regulated online gaming in the US is “far more ominous” than originally thought, according to a new report by Eilers Research.
The report titled: US iGaming Outlook for 2015 and Beyond, slashes Eilers’ initial market estimate of at least $1.95bn a year by 2020 to just $663m per annum at best.
In a section titled: What went wrong? Eilers said pre-launch revenue estimates were “unrealistic” and new forms of entertainment such as social gaming and daily fantasy sports have taken players away from casino and poker sites.
“iGaming in the US is likely to evolve as a small but complementary component of the broader gaming industry and should not be viewed as a way to solve state budget deficits or as a meaningful new growth driver for companies,” the report said.
“Not only have revenues fallen well below expectations, but profitability remains an elusive goal for just about every major iGaming operator and technology supplier and many have now been forced to cut back sales and marketing efforts,” it added.
The report said New Jersey’s “unrealistic expectations” before launch “set the state up for disappointment” and the “fragmented” nature of its market with multiple properties operating multiple sites “compounded” the lack of awareness.
This meant egaming per capita per annum averaged just $21 during the year, well below other mature markets such as the UK which averages $50 per annum after adjusting for sports betting.
Eilers said it anticipates 2015 revenues to increase around 10% year-on-year to $134 in New Jersey, assuming PokerStars becomes licensed in the state early in the year.
“We believe PokerStars will be able to generate $15m-$20m in online poker revenues in year one, but largely at the expense of Caesars and the WSOP, and Borgata and partypoker,” the report said.
In Nevada, Eilers expects revenues to decline around 10% year-on-year to $8.8m due to the withdrawal of Ultimate Gaming and liquidity remaining a challenge.
The report lists California and Pennsylvania as the most likely states to consider online poker legislation in 2015, but gives the odds of a bill passing into law at 50%.
Even if a bill does get across the line, Eilers does not believe California legalizing online poker will transform the sector and predicts first year revenues of $222m rising to $274m by year five – way below other market estimates.
Eilers predicts a bill will get across the line in 2017 with the state launching online poker in 2018 with no ‘bad actor’ carve out allowing PokerStars to enter the market from day one.