BUSINESS

China LotSynergy helps China Mobile tap into booming Chinese lottery market

TAGs: AGTech, China, china lotsynergy holdings, china mobile, china welfare lottery, Macau, Sociedade de Lotarias Wing Hing, sports lottery

china-mobile-lotsynergyBuilding on a relationship that began in 2011, lottery services provider China LotSynergy Holdings has inked a deal to assist the mobile payment-based lottery platform of Chinese state-owned telecom firm China Mobile, the planet’s largest mobile operator.

The deal will allow China Mobile’s 760m subscribers access to lottery betting via online, mobile, SMS and other media. Specifically, China LotSynergy subsidiary Beijing Huacai Yington Technology Company will handle system construction, software development, operational support, as well as sales and marketing. In addition to holding certain exclusive VLT and Keno deals with China’s Welfare Lottery, the Hong Kong-based China LotSynergy also handles land-based and online lottery technology in Russia and Vietnam.

Who wouldn’t want in on China’s booming lottery business? Final figures for 2013 show overall sales rose 18.3% to RMB 309.3b (US $51.1b), with Welfare Lottery sales up 16.9% to RMB 176.5b ($29.2b) and Sports Lottery sales up 20.2% to RMB 132.8b ($21.9b). Xinhua quoted a Ministry of Finance spokesman crediting 2013’s largesse to increased outlets and new lottery products, quiz-style games in particular.

By comparison, the United States’ lottery business was worth $71b in 2012 and 2013’s growth was in the low single digits. China’s 2013 growth rate mirrored that of 2012, suggesting it has plateaued after recording annual rates as high as 32% between 2009-2011. Recent stats show only around 7-8% of Chinese adults currently playing the lottery, which makes for one mighty broad plateau at 20% annual growth.

But as the lottery pie grows, the number of plates is shrinking. Success Universe Group deputy chairman Hoffman Ma told Reuters that Chinese authorities were looking to bring the sprawling market under greater control via consolidation. Criteria for surviving the pruning process including having “stable” technology and not fudging the betting taxes.

Such companies include REXlot Holdings Ltd.’s Okooo.com platform, which handled RMB 6b in sales in 2012 and inked an exclusive partnership with state-run media outlet People.cn Co Ltd. in 2013. Then there’s Shenzhen-based 500.com Ltd., which provides services for China’s Sports Lottery and whose stock has more than doubled over the past two months. Also riding high is AGTech, which is planning a national rollout of its popular virtual sports game Lucky Racing (a co-venture with UK bookies Ladbrokes) in 2014. AGTech’s Hong Kong-listed stock has similarly outperformed the market over the past year, and while CEO John Sun likes growth as much as the next exec, he sometimes frets over China’s lack of a typical gaming regulator/commission to ensure proper compliance.

There is a strong regulatory set-up in Macau, the one place in China you don’t want to be running the lottery. Annual lottery revenue in Macau slipped from MOP 6m ($750m) in 2012 to just MOP 5m in 2013, of which the government and the Macau Foundation take a combined 28%. But that didn’t stop Sociedade de Lotarias Wing Hing Lda from seeking another 12-month renewal of its lottery monopoly license. The renewal was granted, quite possibly because no one else was seeking the honor of being the needle in Macau’s casino haystack.

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