Macau casino operator Success Universe has exited the mainland China lottery market after selling its 80% stake in Honour Rich due to “uncertainty regarding the paperless lottery business in the People’s Republic of China.”
In a filing to the Hong Kong Stock Exchange, the company announced that its wholly-owned subsidiary Victory Devotion Ltd had completed a deal to sell Honour Rich – described as providing a technology services platform and related technical support for the lottery business and sales agency services of lottery in the PRC – to Mr Wu Hong for a total consideration of HK$12 million. Mr Wu, whose purchase also sees him buy out the remaining balance of his own loan from the company totaling HK$5.87 million, had already held 20% of Honour Rich through his subsidiary Up Fly.
It follows a temporary ban on the sale of online lottery products in China, which was put in place in January 2015 by the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sports of the People’s Republic of China but has yet to be resolved.
“In view of the Notice on Issues Regarding Conducting Self-examination and Self-correction Activities of the Unauthorised Sale of Lottery through Internet issued in Janaury 2015 … the group and its lottery business partner, similar to most of its peers, temporarily suspended the paperless lottery sales agency services voluntarily since early 2015, which resulted in significant decrease in operating revenue and increase in loss of the group’s lottery business for the year ended 31 December 2016,” Success Universe said.
“Revenue of the lottery business for the year ended 31 December 2016 amounted to approximately HK$8.3 million, representing a decrease of 88% as compared with approximately HK$69.6 million for 2015. A loss of approximately HK$20.8 million was recorded in the segment.
“Such suspension of the paperless lottery sales agency services remained as at the date of this announcement. In view of the uncertainty regarding the paperless lottery business in the PRC, and indirectly also the uncertainty of the recovery of the related loan which is due from Mr Wu, the ultimate beneficial owner of Up Fly, the Directors consider that the disposal represents an opportunity for the group to realize its residual investment in the Honour Rich Group as well as relieving the group from further need to inject working capital to sustain the operation of its business and redeploy of resources to other investment opportunities.”
