The Chinese gaming industry is expected to get a boost thanks to the World Cup. Brick and mortgage gaming outlets still dominate the market, but online betting’s explosive growth could change all that. CCTV’s Zhou Jie reports.

Online lottery now big in China

The Chinese gaming industry is expected to get a boost thanks to the World Cup. Brick and mortgage gaming outlets still dominate the market, but online betting's explosive growth could change all that. CCTV's Zhou Jie reports.

The online lottery market has been growing rapidly. Research Company Analyst International says China’s online lottery ticket sales have now hit 14.6 billion yuan, a nearly 20 percent increase from the same period last year. The quarterly figure represents about five percent of the country’s total sales of lottery tickets last year. At least one Shanghai company has grown with the development in the sector. Based in Shanghai’s ‘Silicon Valley’ Caohejing High-Tech Park, 9188.com’s office used to be less than 200 square meters, but now it’s grown to over 1,900 square meters. And their team is getting bigger.

Lin Shichun, Vice President of 9188.com, told the reporter: “When we started the company in 2011, we had only 20 people on the team, but now we have more than 140. And the number of our active users hit one million this year.”

Lin says that just like offline lottery sales, his company makes money from commission fees paid by lottery issuing centers around the country. But since online websites don’t have to pay rent and other expenses that offline sales shops pay, they are actually more profitable. Will this become a threat to offline lottery vendors Lin doesn’t think so. He’d prefer to think that online lottery websites are just a complementary part of the industry. And one expert in the business thinks he may be right.

Professor Li Hai, Vice Dean at Shanghai University of Sport, said: “According to our study, most of the lottery buyers offline are low-education, low-income. If the market wants to sustain healthy development, it needs to get people from higher education backgrounds or with higher incomes to become involved. In more mature foreign markets lottery buying is a national habit, so they have high demand, but in China, there’s just limited amount of people playing it. Even if we enlarge the market by issuing more lottery tickets, there will still only be these same people, investing more in it. But the internet can help bring in people with higher education backgrounds and with higher incomes.”

However, the online industry remains in the shadows. So far, only two website operators are properly authorized to sell lotteries online. Other websites, some of which are the most popular ones like Taobao and Lottery 365, in fact do not have authorized qualifications.

Professor Li also said: “The government has issued several notices regulating the online lottery or mobile phone lottery betting. But they are now taking a wait-and-see attitude. Going online is now a trend, but the government hasn’t decided to let the industry develop. So the industry is still unregulated.”

Even so, Lin Shichun is optimistic about his company’s future. He said: “Our website, just like offline sales, is helping the country to raise more money from the lottery and is providing a convenient way to buy lottery tickets, so we think what we do is of value. I think in the future there will not be such a clear difference between online and offline sales, and that the internet will become a popular way of developing the industry.”

Professor Li thinks that if the online sector is fully developed, it will help shape the whole industry, reduce redundancy in offline shops, and allow segmented sales to reduce competition between the online and the offline sector. No one knows how soon that could be, but the results of the World Cup lotteries could point the way.