Online lottery firm bets on mobile Internet

A pedestrian walks past an office of the China Sports Lottery and the China Welfare Lottery in Shanghai, China, 15 November 2009. [Photo/icpress]

Two kinds of lotteries are legal on the Chinese mainland, one for welfare and the other for sports. Proceeds are used to fund charitable causes and mass sport education programs.

Lottery sales have grown more than 10 percent in China for the past decade and exceeded 300 billion yuan last year, up 18.3 percent from a year ago, statistics from the Ministry of Finance shows.

The ministry did not disclose the share of lotteries sold online. According to consultancy iResearch, sports lottery sales at 500.com account for 29 percent of total online sports lottery sales in China during the first half of 2013.

The company said in its 2013 financial results that mobile-registered users account for 67 percent of active users during the fourth quarter of 2013 and their purchases represent around 18 percent of total lottery sales at 500.com.

A government-mandated ban on online lottery sale that went effective on March 1, 2012 aimed to weed out illegal activities such as gambling or scams. 500.com said in its 2013 financial results that it "voluntarily suspended online lottery sales services" when the ban was introduced.

The company walked out of shadow of regulatory uncertainty after the Ministry of Finance gave it the go-ahead to resume its online sports lottery sales in November 2012.

Such regulatory approval has cleared investors' concern that the company's development could be derailed without a nod from regulators.

Meanwhile, an amended version of a regulation on lottery issuance and sale in early 2013 granted legal status to online lottery sale, adding to investors' confidence that the sector is set for robust growth in the years ahead.

So far 500.com is the only Chinese online lottery vendor that has gone public. Law said the move has "a positive effect on the entire industry."

"Little is known about online lottery. If there is any information, it's mostly negative. A public listing subjects the company to scrutiny from investors and regulators and offers greater transparency."