Uncertain Outlook for Online Lottery in China

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For a nation of gambling lovers, it seems crazy to believe that national lottery games are the only legal form of gambling in China, with the exceptions of Macau and Hong Kong. This is probably why official lotteries in the country are huge, with sales outpacing all US state and national lotto games combined.

China’s government is ultra-strict on all forms of gambling, both online and offline. It even prohibits small stakes on the ubiquitous mah jong game, so beloved of older citizens, which was banned completely from 1949 to 1985. This explains why the state-run China Welfare Lottery and the Sport Lottery, launched in 1987 and 1994 respectively, are so popular.

The official national lottery games can be played in local shops for as little as ¥2, with jackpots capped at ¥10 million, which roughly equates to £1 million, a large fortune in a country where the average wage is around £7,000.

There is no official online lottery in China

The official national lottery games have no option to play via their official websites, and while online gambling does have a following in China, it must be done on foreign sites, licensed mainly in the Philippines. Even then, the government works hard to block and disrupt them via its Golden Shield Project, better known in the West as the Great Firewall of China.

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Projects such as Beijing’s ‘Bird’s Nest’ Olympic Stadium were funded by the official Sports Lottery.

 

So why is the Chinese government so much against gambling when the populace are plainly so keen to play? While there is a principled opposition to gambling with the Communist Party, it is also about the loss of hard currency to unregulated overseas operators, which is believed to amount to £230 billion annually, almost three times the value of sales on the official national lottery games.

That’s not to say that the country’s approved lotteries are not thriving. Since Xi Jinping came to power in 2013, combined sales on Welfare Lottery and the Sport Lottery have almost doubled to hit £57 billion. This cash goes towards a number of good causes selected by the state, which also receives 20% of all jackpot prize payouts.

Officials see the national lottery as a good way to permit controlled gambling

Officials in the country believe that the national lottery is a good outlet for people’s love of gambling, which can be kept firmly under state control. Wang Xuehong, an academic who advises the Ministry of Finance, told The Economist: “The government does not want to be held responsible if anything goes wrong. It therefore tries to make sure there is just one regulated outlet for gambling.”

A ban on online national lottery ticket sales was imposed in 2015 and reconfirmed in 2018, while the promotion of official state lotteries by celebrities and through smart devices has also been banned by the Chinese government. This could change, however, after both official state lotteries reported sharp sales slides for the year to July 2019.

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For over 1 billion people in China, official national lottery games are the only way to gamble.

 

Despite all the government efforts, Mr Wang believes that the current spend on unofficial gambling, ranging from illicit mah jong games to big stakes online gaming, is at least five times the annual sales of the official state lottery games. Small operators have sprung up, working within a fine line of the law and even the Sports Lottery has launched virtual car racing and football games on its site.

Official lottery operators have launched instant win games

AGTech, the company that provides terminal for the Sports Lottery, was bought in 2016 by Alibaba, the Chinese equivalent of eBay. Meanwhile, China Lotosynergy has recently installed a new network of terminals for the Welfare Lottery that offer instant win video lottery games, officially sanctioned by the government and the operator.

For online lottery operators, China is an uncertain market. The world’s most populous nation offers great opportunities, but as Google, Uber and other corporations have discovered, it’s not an easy place to do business, and for gambling companies it’s even more complex.

The Chinese government may eventually allow online lottery sales by its official operators, but state-sanctioned licensing of private lotto betting in the country is still a very long way off.

 

 

 

 

 

 

 

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