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An Overview of China Lottery Industry
Market Scale
Regulatory Framework
International Lottery Associations

China: A rapidly growing, under-penetrated lottery and wagering market

The regulated lottery industry in China was launched in 1987 and has since grown rapidly to become one of the world’s largest lottery markets by sales volume. Lottery sales have increased at a compound annual growth rate of approximately 33% between 1987 and 2013. During this time, the products on offer have gradually expanded from an initial base of simple, weekly-draw lotto games to today’s comprehensive range which includes weekly draw games as well as high frequency games, scratch cards, video lottery terminals (“VLTs”), sports betting and virtual sports betting. The two authorised lottery operators in China, the Welfare Lottery and the Sports Lottery, provide very significant levels of funding for good causes such as social welfare in the country and building community sports facilities.

2013 was a record year for the China lottery industry, with combined sales from Welfare and Sports of over RMB309 billion, implying an annual growth rate of approximately 18%. Despite the significant size of today’s China lottery market, the penetration rate of regulated lottery in China remains comparatively low by international standards. Given that the illegal gambling market in China is estimated to be approximately 10-20 times that of the legal lottery market, there is enormous potential for future growth in China’s legal lottery market.

In order to adequately protect the vulnerable, reduce the potential for corruption and to increase the funding available for good causes, the authorities in China are committed to channeling the existing vast underground gaming revenues away from the illegal market and into the legal and regulated lottery network. This process is already well underway, which explains the growth performance of the regulated market in the past several years. Through further initiates such as continued increases in prize payout ratios, the introduction of new rapid-draw lottery and virtual sports betting games, further expansion of the sports betting network and the planned opening of online and mobile distribution channels, the Chinese authorities will strive to make the permitted lottery even more competitive and appealing and secure its continued rapid growth.

For further details on recent industry developments and a more detailed review of trends in the lottery, please refer to the “Management Discussion and Analysis” section on pages 50 to 59.