Hong Kong-based lottery services provider China LotSynergy Holdings has signed an agreement with China’s state-owned China Mobile to assist with the development of a payment-based lottery platform.
The platform will provide China Mobile’s world-leading base of 760 million subscribers with access to lottery betting via online, mobile, SMS and other media.
Publicly traded China LotSynergy (1371.HK) through its Beijing subsidiary will construct the system, develop the software and provide operational support and some sales and marketing.
China’s lottery market is the second-largest in the world after the United States’ and is growing at rates that are likely to see it become the largest in a couple of years. Combined sales by the government’s Sports Lottery and Welfare Lottery rose 18.3% last year to RMB309.3 billion (US$51.1 billion), largely on the strength of new products and an expanding number of outlets.
For all its success, however, Beijing is reported to be concerned about the sprawling trade that has resulted. Reporting, accounting and regulatory controls are lax, which means tax collections have become difficult to monitor in some areas, and the government wants to see a more centralized and technologically efficient market over which it can assert greater control.
Experts say this spells enormous opportunities for private-sector platform providers and game developers like China LotSynergy and others, among them: Hong Kong-based REXlot Holdings (0555.HK), whose Okooo.com platform handled RMB6 billion in sales in 2012 and enjoys an exclusive partnership with state-run media outlet People.cn; and Shenzhen-based 500.com, which trades on the New York Stock Exchange (WBAI) and provides services for the Sports Lottery; and Hong Kong-based AGTech (8279.HK), which is in the midst of a national rollout of a virtual sports betting platform called Lucky Racing in partnership with UK bookmaking giant Ladbrokes.
China LotSynergy also has exclusive agreements with the Welfare Lottery to provide video play terminals and keno platforms and providing lottery technologies in Vietnam and Russia.
