China is going nuts for the European Championship, though it’s not just the football which is attracting a frenzy of fans. The country’s controversial grey market of online lotteries is once again booming.
The lottery sales for 36 group stage games in this year’s UEFA Championship reached 3.75 billion RMB (over $560 million USD), said local media, citing data from China’s National Lottery Center. At around 104 million sales per game, the total lottery revenue for the football event is expected to reach 5.3 billion RMB ($795 million USD).
Unlike Western lotteries, China’s lotteries are a little more diverse. While the China Welfare Lottery employs the familiar powerball and scratch-off ticket games, the highly-popular China Sports Lottery also allows fans to predict the outcome of major sports events for different return rates. The government maintains that it’s not gambling, which is technically banned in all forms on the Chinese mainland.
While running lotteries online has been illegal for a little over a year, many major players are finding loopholes in the system by essentially setting up O2O and on-demand services for offline providers. It’s created a grey market of sellers that are making serious cash on China’s [technically not] gamblers.
It’s not the first time China has caught sport-lottery fever. During the 2014 FIFA World Cup in Brazil, sales of Chinese online sports lotteries surged to 85 billion RMB ($13.1 billion USD) in 2014 from 42 billion RMB in 2013.
The government then cracked down on the online sales in March 2015, after evidence of fraud was found at several provincial lottery administration centers. The policy effectively suspended the operations of a sector that was worth 85 billion yuan ($12.75 billion USD) in 2014.
Today’s vendors act as intermediaries to get around the new laws. For example, Okooo.com, the web platform of lottery terminal provider REXlot Holdings Ltd., does not get involved in the lottery purchase directly but instead directs buyers to nearby offline lottery stores. The payments can even be made to the online lottery stations, and the stores then keep the physical lotto tickets for the 30 days. Other sites providing similar services include Letouvip and Caipiao365.
In addition to the O2O model, other lottery-related services try to engage users in lottery games based on virtual currencies. These currencies cannot be converted into cash but can be used to purchase other virtual lottery tickets or products like iPhones from the platforms themselves.
From the users’ point of view, the experience is virtually the same as the previous online lottery sales systems, but the chances of encountering untrustworthy platform selling fraudulent lottery tickets are the same, or even higher.
Including the most recent suspension, China’s messy online lottery industry landscape has recorded five major suspension crises between 2007 and 2015. The suspensions affected lottery services run by some of China’s top internet companies, including Alibaba’s Taobao, Sina’s Aicai and similar platforms from Tencent and NetEase.
After one year of suspension, the government remains cautious about the industry. In recent months, reports on a potential re-launch of online lottery sales have piled up in local media, but the government has given no definitive indicators.