Asian lottery technology provider AGTech Holdings believes that the company will achieve a significant breakthrough in business development following the Chinese lottery regulatory evolution.
In a filing with the Hong Kong Stock Exchange, AGTech has reported its earnings for the third quarter ending Sept 30, posting a gain in revenue to HKD76.5 million from HKD53.1 million in the same period a year ago.
According to the company, the gain in revenue was attributable to sales of newly added hardware and technical services and mostly derived from gaming technologies, business provisions of sports lottery management and marketing consultancy services in China.
Gross profit declined from HKD18.4 million in Q3 2014 to HKD11.5 million this year.
For the year to date, the company recorded an increase in sales of approximately 45%, attributable to the contribution of the recently acquired hardware manufacturer Zoom Read.
Zoom Read supplies lottery hardware to 29 provinces, cities and municipalities in mainland China and has machines operating live or on trial in markets including South Africa, Cyprus, the United Kingdom, Italy, Austria and Canada.
The company expects a significant breakthrough in terms of business development including promotion activities of Lucky Racing, e-Ball Lottery, and smart phone and internet channels.
“Our long-term objectives are to maintain a leading position as a lottery technology group in China and to provide innovative and competitive legal lottery games to help the Chinese government to crack down on illegal gambling,” said AGTech. “In order to achieve these objectives, we are committed to bringing together international and domestic industry expertise, technologies, management, skills and infrastructure into the Chinese lottery markets both through the existing and any new remote channels.”
Although the lottery market in China has recorded sales of approximately RMB242.8 billion in the first eight months of 2015, that represents a decrease of approximately 1.8% compared to the corresponding period in 2014. Lotto remains the largest product in the China market representing 64.9% of sales, according to the Ministry of Finance.
Sports Lottery contributed RMB109.4 billion, a decrease of approximately 4.2% year on year and accounting for 45.0% of total lottery. The Welfare Lottery posted .4% increase in sales to RMB133.4 billion, accounting for 55% of total sales.
“The sharp reduction in sales is attributable to the strong and decisive action taken by the authorities to prohibit all internet lottery ticket sales activity and which came into effect in early March. This enforcement is ongoing and is seen as a precursor to a more clearly regulated operation, management and distribution model. It is expected that selected lottery products will gain approvals for trial sales in certain provinces in smart phone channel,” said AGTech.
Geaspar Bryne, head of corporate and strategy for AGTech, believes that the early success of online sports lotteries that had caught the ever watchful eye of the government.
“The market had grown. This distribution channel seems to be very, very successful. There was a lot of volume going through it,” Bryne told CalvinAyre.com. “I think [the] ban had happened in the absence of clear regulations, best practice and also in the absence of really strong technology systems.”
