Lottery companies cash in as China raises bet on punters
By Farah Master
HONG KONG (Reuters) - Every day during his lunch break, Chinese businessman Shen Bin buys three lottery tickets for about 33 cents apiece and then watches to see if his chosen numbers flash across television screens suspended from the ceiling.
"I haven't won yet. Hopefully one day. But for now, it doesn't matter because the money goes to charity," Shen said in the brightly lit store on a busy road in Shenzhen, a booming metropolis just north of Hong Kong.
Half a world away in New York, investors in Chinese online lottery platform 500.com Ltd have found their own winning ticket: the stock has nearly tripled from its $13 initial public offering price in the six weeks since its New York Stock Exchange debut.
500.com, the only Chinese lottery firm so far listed in the United States, is among a handful of listed companies that stand to benefit as China whittles down thousands of private lottery operators to a handful of licensed and regulated firms serving more than 400 million punters, say industry experts.
"Over the next five years it is very clear that the Chinese market will continue to grow very quickly and the government regulatory regime will become more open and transparent," said Zhengming Pan, chief financial officer at 500.com.
Spurred by rising disposable income, a strong appetite for gambling and more sophisticated games, China's lottery market has boomed with customers splurging some $23 billion in 2012, compared to $37 billion by punters in the world's biggest lottery market in the United States.
With 20 percent growth rates projected for the next three years, China is expected to overtake the United States and leap into the top spot by 2015. The U.S. lottery market is expected to show single digit growth during the same period.
Sales revenue generated by the lottery industry in the United States was $71 billion in 2012 compared with $43 billion in China, according to data from China's Ministry of Finance and the U.S.-based North American Association of State and Provincial Lotteries. Continued...