Alibaba makes major China lottery play by acquiring AGTech Holdings

alibaba-agtech-china-lotteryChinese e-commerce giant Alibaba Group has taken a controlling stake in Hong Kong-based lottery technology provider AGTech Holdings.

Over the weekend, Alibaba offshoot Ali Fortune Investment Holdings announced it would pay HKD 2.39b (US $308m) to acquire a 59.45% stake in AGTech. The purchase price will be split into HKD 1.68b of AGTech shares and HKD 712.6m worth of convertible bonds.

AGTech has a well-established presence in China’s lottery business, supplying technology to land-based sports and welfare lottery retailers in 80% of China’s provinces. AGTech also provides its e-Ball virtual football game in Jiangsu province and has a joint venture with UK bookies Ladbrokes that offers the Lucky Racing virtual racing product in Hunan province.

To date, AGTech has yet to offer online or mobile lottery products, but Alibaba says its involvement will offer opportunities for AGTech to expand into cloud computing. Once the deal is complete (by mid-September this year), AGTech will become the “exclusive business platform” for Alibaba’s lottery operations.

Alibaba ran a lucrative online lottery business via its Taobao shopping site, which reportedly accounted for 11% of all online lottery sales in China. The company was forced to halt its lottery activity last March following Beijing’s ‘temporary’ suspension of online sales, which was prompted by the discovery of widespread corruption at provincial lottery administration centers. The shutdown was blamed for a subsequent slide in Alibaba’s revenue.

This isn’t Alibaba’s only effort to establish a gaming footprint in China. Last week, the company announced it had teamed with Oceans Sports and Entertainment to promote the International Federation of Poker’s Match Poker events on the Chinese mainland.