Inside Asian Gaming

inside asian gaming August 2014 38 Into the Light Not only did last month’s World Cup fuel a spike in China’s lottery sales, particularly through online channels, but it also prompted calls for better scrutiny over the paperless lottery sector, where there has been a proliferation of gray-area ticket sales A lthough China’s national football team once again failed to qualify to compete in the FIFA World Cup held in Brazil last month, tens of millions of Chinese punters nevertheless avidly followed the matches and rooted for teams from other nations, with their cheers amplified by the fact their money was riding on the outcomes. The state-run China Sports Lottery Administration Center said its football lottery sales between 12th June and 13th July reached RMB12.32 billion (US$1.98 billion), up nearly sixfold from RMB2.2 billion during the 2010 World Cup held in South Africa. Overall national sales of the Sports Lottery including football hit RMB19.24 billion in June, 83% higher than the previous year, or up more than three times from RMB6.1 billion in June 2010, figures from the Chinese Ministry of Finance show. “The World Cup always spikes the lottery sales but this year’s result exceeds, by far, all of our expectations,” says Li Jian, co-president and founder of Beijing-based lottery research house Caitong Consultancy. “The major reason is due to the rapid development of the online sales channels, particularly the mobile Web, as the Internet sales accounted for 70% of the total in this tournament. More females and youngsters born in the 90 s bet on the [football] matches with the applications on their mobile phones.” Gambling was banned in mainland China after the Communist takeover in 1949, and only in 1987 did the state introduce the country’s two lotteries—one of them to fund the building of sports facilities, the other to fund social and welfare programs across the Feature provinces, run respectively by state-owned China Sports Lottery Administration Center and China Welfare Lottery Issuance and Administration Center. Ahead of this year’s World Cup, Japanese investment bank Nomura had predicted in a research note that “Most people are likely to place their bets through the Internet or through mobile apps [in China], since the time difference between China and Brazil means most matches will start when lottery shops have closed.” All World Cup matches this year took place after midnight in China’s single time zone, with the latest matches of the day kicking off at 6 a.m. Beijing time. Nomura tipped 500.com , the only US-listed company involved in the China lottery sector, to gain on this trend because its business focuses on the online platforms. Zhengming Pan, 500.com’ s chief financial officer, stated in a recent media briefing during the World Cup: “Our daily lottery sales during the tournament is about three to five times more than the normal days.” “We should not only focus on the revenues the 64 matches of the World Cup can bring. I believe it is an important opportunity to significantly increase the penetration rate of the online lottery [among Chinese],” Mr Pan added. “It is about how to use this World Cup to entice more people who know nothing about the online lottery into the market.” Mr Pan’s company joined forces with PPTV, a peer-to-peer video streaming Web site popular in China, to run a marketing campaign of its World Cup betting products. Before that, in January, it had inked a deal with China Mobile E-commerce, the payment subsidiary of China Mobile, China’s biggest mobile operator by subscribers, in a bid to prepare for a spike in sales this summer. Hong Kong- listed lottery firm REXLot Holdings also promoted its online lottery business, okooo.com, on WeChat, the social media service provided by technology firm Tencent Holdings. Apart from companies specifically involved in the lottery sector, China-facing technology giants were also keen to get in on the lottery boomgenerated by theWorld Cup. Big names like Tencent and Alibaba partnered with the provincial lottery centers to allow users to place bets on World Cup matches through their smartphone applications and Web sites like Alibaba’s e-commerce platform Taobao, China’s answer to Amazon. The Chinese lottery market is expected to overtake that of the US, currently the world’s largest, by 2015, driven by the rapid rise in disposable incomes across China and an increase in the variety of