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China Mobile is joining the country’s lottery boom

Tuesday, 11 March 2014 17:00
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Hong Kong-based lottery services provider China LotSynergy Holdings has signed an agreement with China’s state-owned China Mobile to assist with the development of a payment-based lottery platform. 

The platform will provide China Mobile’s world-leading base of 760 million subscribers with access to lottery betting via online, mobile, SMS and other media. 

Publicly traded China LotSynergy (1371.HK) through its Beijing subsidiary will construct the system, develop the software and provide operational support and some sales and marketing.

China’s lottery market is the second-largest in the world after the United States’ and is growing at rates that are likely to see it become the largest by 2015. Combined sales by the government’s Sports Lottery and Welfare Lottery rose 18.3% last year to RMB309.3 billion (US$51.1 billion), largely on the strength of new products— notably the promotion of quiz-style games—and an expanding number of outlets. 

Welfare Lottery sales amounted to 176.53 billion yuan in 2013, an increase of 16.9%. Sports Lottery sales rose 20.2% to 132.8 billion.

For all its success, however, Beijing is reported to be concerned February 2014 | INSIDE ASIAN GAMING 37 about the sprawling trade that has resulted. Reporting, accounting and regulatory controls are lax, which means tax collections have become difficult to monitor in some areas, and the government wants to see a more centralized and technologically efficient market over which it can assert greater control

Experts say this spells enormous opportunities for private-sector platform providers and game developers like China LotSynergy and others, among them: Hong Kong-based REXlot Holdings (0555.HK), whose platform handled RMB6 billion in sales in 2012 and enjoys an exclusive partnership with state-run media outlet; and Shenzhen-based, which trades on the New York Stock Exchange (WBAI) and provides services for the Sports Lottery; and Hong Kong-based AGTech (8279.HK), which is in the midst of a national rollout of a virtual sports betting platform called Lucky Racing in partnership with UK bookmaking giant Ladbrokes.

China LotSynergy also has exclusive agreements with the Welfare Lottery to provide video play terminals and keno platforms, and provides lottery technologies in Vietnam and Russia. 

But the potential for growth is greatest in China. A recent Reuters report on the sector highlighted that just 7% to 8% of Chinese adults buy lottery tickets, compared with 70% to 80% of adults in other Asia-Pacific nations. 

Just a few years ago, China’s lottery market consisted largely of traditional paper lotto tickets, according to Reuters. Now, single match games—where players bet on the results of basketball or football—video lottery terminals and scratch games are more common. 

The internet and the telephone became legal lottery channels at the end of 2012, but online tickets still have to be backed by paper stubs until an actual online market is created. Beijing is expected to announce new rules this year that will clarify and detail legislation for the fast-growing industry.




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