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Everyone agrees that the market for regulated online poker in California will be the largest in the United States.
But ask how large, and that agreement gives way to a broad range of opinions.
The short answer: in a base case scenario, regulated intrastate online poker in California will likely generate $215mm in the first year and closer to $310mm annually at maturity.
The longer answer follows.
|Source||Circa||Year 1 (mm)||Mature (mm)|
|NV model ‡||2014||$151||$210|
|NJ model †||2014||$125||$204|
All projections are for direct gaming revenue from poker and do not address the broader economic activity (taxes, employment, etc) that regulated online poker would generate.
The projections also don’t speak to what sort of profit could be realized by California operators. By and large, the projections assume intrastate play only. Base case projections chosen when available. More info, links and caveats below.
An unweighted average of the numbers above yields the following consensus base case projections for annual revenue from California’s regulated online poker market:
Throw out the high and the low from each set and the consensus is considerably reshaped:
I’m inclined to assign the most weight to the projections from Academicon / PokerScout, Eilers, GamblingCompliance and models based on actual performance in New Jersey and Nevada – aka, the low end of the spectrum.
Why? A couple of reasons:
I’m also inclined to put weight on GamblingCompliance’s estimate because it’s the freshest (March 2015) and has a downward revision from their 2014 number.
On the high end, Capitol Matrix is an outlier projection generated (in some part) to serve a political aim and consequently should be discounted. Furthermore, Morgan Stanley has repeatedly been forced to shave massive chunks from its past U.S. online gaming forecasts, suggesting a tendency that warrants a similar discounting of their numbers for California.
That’s why my best guess for the first year – $215mm – is 29% below the unweighted average of $301.6mm.
Forecasts differ on the maturity point for California’s regulated online poker market.
GamblingCompliance pegs it at four years out from launch. Eilers employs the five-year mark. Finally, Academicon sees maturity hitting at a full ten years following the market’s opening.
Deutsche Bank and Morgan Stanley have 2020 as the maturity date for California. This suggests a six- or seven-year ramp based on publication date.
For the purposes of our conclusion, maturity is defined as the fifth year of operation.
Below find links to more information regarding the projections referenced in this article:
Base case projections chosen when available. All projections assume intrastate play only.
*Blue Sky numbers per on updated projections issued after Black Friday. Blue Sky offered a 10-year horizon toward maturity; we took their Year 5 number for a more like-to-like comparison with other forecasts.
† NJ model based on annual run rate of $29mm (trailing 12 months, per DGE data) and a population adjustment of 4.36x, mature market assumes eventual run rate of $3.9mm monthly for NJ.
‡ NV model based on current annual run rate of $11mm (NV GCB data / internal estimates) and 13.7x population adjustment, mature market assumes eventual run rate of $1.16mm monthly for NV.
This article originally ran in July 2014. It was substantially updated and republished in April 2015.