According to a report from Morgan Stanley, 20 US states will have regulated internet gambling by 2020. Currently, three states are online – Nevada, New Jersey, and Delaware – with others like Pennsylvania and California currently examining the issue.

Morgan Stanley anticipates only Californiapassing internet gambling legislation in 2015 for a 2016 opening, meaning we won’t see another state open up until a year-and-a-half at the earliest, according to the financial outlet.

It added, “We forecast a market size of $1.3 billion in 2017 with seven states live and $5.2 billion in 2020 with 20 states live.” Previously, Morgan Stanley had anticipated a market size of $3.5 billion in 2017 and $8 billion in 2020, meaning its projections have been slashed by 62% and 35%, respectively.

Morgan Stanley also touched on the latest online gaming results from New Jersey, which many analysts have deemed underwhelming, but the state was early to market. There, Morgan Stanley predicts a significant impact from PokerStars, which could launch in New Jersey as soon as next month, saying, “While we our cutting our estimates in New Jersey, we continue to believe PokerStars’ entrance [will accelerate] growth. As a precedent, we look at PokerStars’ entrance into the Italian online poker market, which grew 62% one year after it entered.”

Morgan Stanley’s graph showing the addition of regulated poker jurisdictions over time (pictured) specifically mentions legislation in Massachusetts, Iowa, Colorado, Pennsylvania, New York, Illinois, and California. New Jersey and California, interestingly, are quite equal in terms of market sizes on the graph at $500 million to $600 million. This in part because New Jersey will have a three-year head start on California if Morgan Stanley’s prediction of California coming online in 2016 holds.

Morgan Stanley foresees poker-only legislation in Illinois, New York, and Pennsylvania, with those markets opening in 2017. If all 50 US states were to approve online gaming and go live, which Morgan Stanley claims is “unlikely,” its “forecast indicates atotal US online gaming potential of $10.7 billion.”

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