HONG KONG COMPANY WINS CHINA'S FIRST INTERNET LOTTERY CONTRACT

4 May 2007

VODOne wins online lottery agent prizes

The appointment as the first online agent for China's popular welfare lottery has been won by Hong Kong-listed, Beijing-backed internet video venture VODOne, company chairman Zhang Lijun announced this week.

VODOne Telemedia has been appointed official agent, and is a locally-registered company that is majority state-owned, in which the China Association of Social Workers holds a 47 percent stake. VODOne says it has a 50-year exclusive contract with VODOne Telemedia – in which Mr Zhang also holds a large stake.

The China Association of Social Workers, which oversees the lottery gave its approval to VODOne in a decision which deputy head Zhang promises tougher action against unauthorised sales over the internet.

Interviewed by the UK Financial Times newspaper, Zhang said, “I will be involved in the very important job of cleaning up...online sales. Our company enjoys a very special position.”

There has been a strong drive among Beijing officials to promote and expand the country’s welfare and sports lottery systems – the only legal forms of gambling at present in China – both to raise funds and to provide an alternative to illegal betting. The VODOne contract indicates a merging of government and private investment and expertise in politically or socially sensitive sectors such as gaming and Internet media.

VODOne aims to account for 50-70 percent of the estimated Rmb 12 billion of a total Rmb 100 billion ($13 billion) in annual Chinese lottery sales that it says are currently bought through unregulated online vendors. Chinese state media have put total lottery sales at Rmb 82 billion in 2006, with the welfare lottery – the larger of the two – growing at 20 percent a year.

Online sales have helped fuel the growth because ordinary tickets can only be bought through authorised retail outlets. It is feared that "unofficial" Internet retailers may cheat lottery gamblers.

VODOne and the Social Workers Association will divide the commission on sales, which is understood to be between 7 and 10 percent.

Illegal gambling in China was estimated by state media in 2005 to be as high as Rmb 700 billion. Huge sums are believed to leave the country as determined Chinese players pursue their passion for gambling by making trips to Macao, Burma, North Korea and Las Vegas. The hopes of gambling companies were raised recently by reports that the China Communist Youth League was interested in setting up a joint venture with foreign investors to offer online poker to young people, but further reportage on this initiative has been sparse.

Online Casino News courtesy of InfoPowa

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