Chinese Lottery Supplier Booms Even While Macau Slumps

Posted on: May 12, 2015, 03:23h. 

Last updated on: May 12, 2015, 03:42h.

A-ChinAGTech Chinese lottery Asia gamblingese-man-wears-a-mask-to-conceal-his-identity-after-winning-26m-in-a-Chinese-lottery-2011
Gambling may be mostly illegal in China, but state-run lotteries are available. (Image: Liu Junfeng/Asianewsphoto)

Chinese gamblers may not be spending as much time or money in Macau as they were this time last year, but that doesn’t mean that they’ve deciding gambling just isn’t for them.

While casinos in Macau report record slumps in their revenues, at least one Chinese lottery supplier is reporting that business is booming.

AGTech Holdings, a Chinese lottery supplier, has reported that their revenues increased by 89 percent during the first quarter of 2015.

The company brought in HK$48.5 million ($6.3 million) during the first three months of this year, up from HK$25.7 million ($3.3 million) over the same period in 2014.

The company credited their growth to the success of their hardware division, which now supplies products to 29 provinces, cities and other municipalities in China through its subsidiaries.

The company generates most of its revenue through gaming technologies, including software, systems, and management and marketing consultation.

2015 Could Be Big Year for China’s Lottery Industry

According to AGTech chairman and CEO John Sun, this could be just the beginning of a big year for the growth of lottery games in China.

“We expect 2015 to be a year of significant regulatory progress in the China lottery industry,” Sun said. “We believe that, following the regulatory evolution of the Chinese lottery industry and relying upon our competitive advantages formed in game development and channel construction, we are well-positioned to achieve a significant breakthrough in business development in the near future.”

Most forms of gambling are illegal in China. However, citizens may game in both Macau and Hong Kong, as well as participate in two state-run lotteries on mainland China: the China Sports Lottery and the China Welfare Lottery.

However, recent crackdowns on corruption by the Chinese government have severely reduced the amount of gambling taking place in Macau, particularly among high-end VIP clients.

While some of this business has been redirected to other casino destinations, it seems plausible that some of the demand for gambling is being supplied by the government lotteries, which in turn could mean more revenue for companies like AGTech.

Asian Growth Expected Throughout Industry

That company is hoping to expand their business, and is already talking to potential customers in jurisdictions including Canada, South Africa, the UK and Italy. But for many in the gambling industry, the Asian market is still the biggest potential area for growth in the world.

For instance, the Las Vegas-based Union Gaming Group, which serves advisory roles for the casino industry, has recently opened a second office in Asia in order to offer investment banking services in Hong Kong.

In a statement, Managing Director Rich Moriarty said that “the next 20 years belongs to Asia” when it comes to expansion in the gambling industry.

“We want to make sure that our commitment to the region fully reflects the opportunity that we believe exists,” he said.

Right now, the most exciting news for casino operators is coming out of Japan, where Prime Minister Shinzo Abe is hoping that this will be the year that his proposed integrated resort legislation will be approved by parliament.

Korea also seems like a likely target for casino expansion, with the Philippines and Vietnam also presenting opportunities for some developers.