AGTech Holdings has boosted its share of China’s massive lottery market with a winning bid to supply betting terminals to the Guizhou Sports Lottery Administration Centre.
The contract will be fulfilled by a Beijing subsidiary and covers approximately 75% of the terminals included in the tender, lifting AGTech’s share of the Guizhou market above 65%.
AGTech (HKSE: 8279) claims to supply half of China’s installed base of 130,000 sports betting terminals, a market reach that extends to 80% of the country’s provinces and municipalities. The company also partners with UK betting giant Ladbrokes through Asia Gaming Technologies Limited to provide China’s only approved virtual fixed-odds sports betting game.
Gambling is illegal in China but the government vigorously promotes its Sports and Welfare lotteries, which are the second-largest in the world after the United States and fund an array of social services, and in the case of the Sports Lottery, public fitness programs and training for the country’s Olympic athletes. They’re immensely popular, too, with sales up 20% last year to a combined 245 billion yuan (US$40 billion) following a record 2011 during which sales increased 33% to a record 221 billion yuan ($35.5 billion).
AGTech derives most of its revenue—HK$97.2 million in the first half of 2013—from the technologies and services it provides to the China Sports Lottery. This includes game software, systems, hardware and marketing services in addition to its betting kiosks. Net income from operations amounted to HK$1.4 million in the first half. However, the company reported a $52.7 million loss as a result of its adoption of Hong Kong Financial Reporting Standards governing the payment of share options to investors, directors, officers and other eligible employees.
