outlook

Something to consider...

Outlook

According to the data from the Ministry of Finance, lottery sales in China have
increased at a Compound Annual Growth Rate (CAGR) of over 30% for the last two
decades, which is higher than the CAGR of the Gross Domestic Product (GDP) for the
same period in China. Lottery sales, as a source of government revenue, have played an
important role in the development of public well-being. In particular, the only two staterun
legal lotteries in China, namely Sports Lottery and Welfare Lottery, have provided
a major source of funds for the building of public sports facilities and the financing of
social welfare programs respectively.
Despite the fact that the lottery industry continues to show strong year-on-year growth
as a whole, there is still enormous potential for future growth in China’s lottery
market. This situation is due to the low lottery penetration rate in China and low sales
rates compared to other more developed nations in per capita terms. The industry is
also impacted by the illegal gambling market which is fragmentary and uncountable;
hence leading to the reformation of the lottery sector by authorities to recapture
such underground lottery revenues. The promulgation of the “Regulations on the
Administration of Lotteries” and the “Implementing Rules for the Regulations on the
Administration Lotteries”, as well as the introduction of the new rapid-draw lottery
games and single match sports betting, the increase of prize payout ratios, and the
opening up of online and phone lottery distribution, are all a reflection of the Chinese
government’s dedication to making the lottery industry more credible, competitive and
appealing in order to support its long-term growth.
Online lottery ticket sales appear to be the developing trend of the industry. Nonetheless,
the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of
Sports jointly announced in early 2012 that some illegal websites selling lottery tickets
would be banned. Other means of paperless tickets, such as sales via mobile phone
applications, have become the new focus of the industry. The Group aims to leverage
its access to the world-class expertise of its strategic shareholders and is increasing
its focus on new media technologies and sales platforms to capitalize on this growing
market development.

...http://www.hkexnews.hk/listedco/listconews/gem/2013/0808/GLN20130808055.pdf