Hong Kong Economic Journal Interview: Booming Chinese lottery market a safe bet under new government measure
Hong Kong, Nov. 12 (HKEJ) -- Bets on the Chinese lottery market maybe worth the risk after last month's government approval of lottery sales via the internet and by phone.
China's lottery sales, estimated to reach 170 billion yuan (US$25 billion) this year, began in 1987 as part of efforts to raise funds for welfare services and sports development.
"In China, lottery tickets used to be seen as a cheap and easy way to hit big money for low-income earners on the way home from work,” said Daniel Liao, chief financial officer of
China Lotsynergy Holdings Ltd., a lottery systems provider. "The situation will change. Lotterypurchase will be only a few clicks away as more high-income earners will be able to buy tickets using computers and mobile phones.”
Lotteries can be sold online and by phone as early as the middle of next year, said the company.
Investors worldwide are keen to profit from the mainland lottery, possibly the world's fastest-growing market. JP Morgan Chase & Co. is among those that have given the market a vote of confidence. It raised its stake in Lotsynergy to 10.37 percent last week from 1.29 percent.
Liao said he expects the market to grow more than 30 percent next year after the government announced draft regulations on online and telephone lottery sales to allow new distribution channels.
It is widely seen as a move to curb the 1 trillion yuan illegal gambling market that has been a huge headache for the government.
The lottery business is operated by the Chinese government and firms, including Lotsynergy, provide local lottery terminals, equipment and betting halls.
Liao said the company retains about 1 percent of lottery sales. The ratio varies within a narrow range for different lottery products.
Video lotteries, which account for more than 70 percent of the company’s sales, are seen as a growth engine with daily turnover expected to double to 33 million yuan at the end this year.
The company earlier reported a swing to a third-quarter profit of HK$160 million (US$20.6 million) from a loss of HK$81.4 million in the same period last year, mainly helped by a surge in video lottery sales and a one-off gain of more than HK$100 million from early redemptions of convertible bonds.
The stock closed 2.94 percent lower at 33 HK cents on Friday. The benchmark Hang Seng Index lost 1.93 percent to 24,222.58 points.
-- Contact the reporter at julianluk@hkej.com
