Analysis on Development of Online Lottery Industry in China

On Apr. 3, 2015, the Chinese government released Ban on Unauthorized Online Lottery Sales in a government notice, which reiterated that any entity or institution without the approval of the Ministry of Finance of China should not engage in online lottery sales.

There was a contrast in growth rate before and after the ban on online lottery sales. China’s lottery sales value increased from CNY 106 billion in 2008 to CNY 394.6 billion in 2016 with the CAGR of 17.86%. The CAGR is 23.84% during 2008-2014, before online lottery sales was banned. The overall industry suffered negative growth in the beginning of 2015. Although there was a recovery in 2016, the growth rate was not as fast as before. China’s lottery industry accounted for 0.53% of the GDP in 2016 while that of developed countries generally accounts for 2-3% of the GDP, so there is enough development space in China’s lottery industry.

A contrast between China welfare lottery and China sports lottery: The CAGR of China sports lottery was 19.38% during 2008-2016. The CAGR was 25.29% during 2008-2014, before online lottery sales was banned while the sales value declined by 6% in 2015 and grew by 13%, after this ban. The CAGR of China welfare lottery was 16.61% during 2008-2016. The CAGR was 22.69% during 2008-2014, before online lottery sales was banned while the sales value declined by 2% in 2015 and grew by 2% after the ban. On the whole, online lottery sales have greater influence on sports lottery than on welfare lottery.

China’s online lottery was on a booming trend before the ban. China’s online lottery sales have seen an explosive growth before the ban on unauthorized online lottery sales. Sales value of online lottery grew from CNY 2 billion to CNY 85 billion during 2008-2014 with the CAGR of 86.81%. In addition, the penetration rate of online lottery industry kept growing, from merely 2% in 2008 to 22% in 2014. With no geographical limitations, together with the professional and convenient analyzing and purchasing services contribute to the explosive growth of online lottery sales.

 

Reference:

Lottery Industry Overview in China, 2011-2020

The sales value of lottery increased from CNY 221.58 billion in 2011 to CNY 382.38 billion in 2014, while it declined in 2015 with the suspended online sales by government in March.