The “Interim Measures for the Administration of Internet Lottery Sales (「互聯网销售彩票管理暂行办法」)” and the “Interim Measures for the Administration of Telephone Lottery Sales (「电话销售彩票管理暂行办法」)” announced on 9 October 2010 by the Ministry of Finance (MOF) China signify the support and encouragement in terms of policy concessions that the State gives to such new channel for sales of lottery. The China lottery is set to enter the Internet era. The government’s decision to introduce sales of lottery via the Internet and telephone has a profound effect and influence in the following ways:

1.      It will cause a leapfrog development of the China lottery industry to swiftly enter the Internet era taking advantage of new technology and channel;

2.      The introduction of new sales channels will bring change in the structure of lottery players to see more coming from the middle-to-high income group and hence more new lottery products available to market;

3.      It will bring revolutionary change to the management mode, management process as well as security protection, which is likely to culminate in the building of a uniform issuance and management system for the new channel. It is expected the two lottery issuance authorities (China Welfare Lottery Issuance Centre (CWLC) and The Sports Lottery Centre of the General Administration of Sports) will select the relevant cooperation partners and nationwide sales agents by Q1 of 2011.

4.      It is to a great extent a huge blow to the illegal lottery and gambling activities in the nation.

 

With the promulgation of the two Interim Measures, the regulation of MOF on Internet lottery sales will be rendered more effective, the management by lottery issuance authorities including the Ministry of Civil Affairs and CWLC will be more effective, the business operation by the sales organizations and sales agents will be conducted in a more regulated manner, and more importantly, players will enjoy the benefit of a more secure and convenient way of purchasing lottery. All these will greatly contribute to the rapid development of Internet lottery sales. Sales of lottery nationwide are likely to reach RMB 1trillion in a few years time.

 

Given the uniqueness of the Internet as a lottery sales channel and the continuous development of Internet technology, the issuance and management of China lottery will encounter great challenges. Equally importantly, market participants are required to possess greater strength, experience and technical capabilities to meet the new requirements on technical security, business operation, and management support.

 

In light of the spirit of the Interim Measures, sales agents should meet the following criteria:

1.      Should have a profound understanding of the China lottery;

2.      Should be able to comprehend policies and operate in accordance with the regulations;

3.      Should have substantial operation and management experience in lottery industry;

4.      Should possess strong technical capabilities in the Internet sector;

5.      Should be of considerable corporate size.

 

CLS has grown along with the development of the China welfare lottery. Since 2007, CLS has formed strategic partnerships with international leading lottery companies and made reference to their technology and experience. CLS has formed three business streams including CTG, video lottery and Internet lottery. The company has made tremendous progress in building its system capability on video lottery, Keno and CTG. It’s nationwide operation and management experience is well recognized by issuance authorities and its cooperation partners. In the meantime, CLS has stayed close to the development of Internet lottery, and built up their strength in developing new sales channel for lottery. CLS has comprehensive competitive advantages to satisfy the requirements of the Interim Measures:

1.      CLS is among the top technology providers for Internet and telephone lottery sales in China. In the last three years, CLS has built up a technical and operation team of +100 people with specialties in lottery, games, mobile phone and telecommunication to cater to the R&D and business needs of such new lottery sales channels.

2.      CLS is a top supplier of a wide range of system and products on Internet lottery sales in China, possessing and/or in the process of completing the following: Internet lottery sales management platform, Electronic instant lottery system, Electronic payment system, as well as Mobile lottery client-side software and Electronic instant lottery games.

3.      CLS has formed industry-wide partnerships including its exclusive business partnership with China Unicom (one of three major telecom operators in China), technical collaborations with Bank of Communications, the Lenovo Group and other mobile platform technology provider. These partners have contributed invaluable experience to the development of the technology for and operation of new sales channels.

4.      CLS is among the earliest market participants to be engaged in mobile lottery in China and well known for observing the highest standard of the regulations. In response to request of provincial lottery authorities, and subject to policy approval and regulations governing operation, CLS has assisted several provincial lottery authorities to launch Internet and telephone lottery sales as well as Internet information provision. These provincial lottery authorities and the relevant partners are highly satisfied with the technical services provided by CLS.

5.      CLS is among the earliest developers of Electronic instant lottery system in China. By working with international technology companies, and making reference to their technology, CLS has developed Electronic instant lottery system, which can support different sales channels including mobile phone, Internet, self-service terminal, as well as a wide range of instant lottery games.

 

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