Online lottery suspension dragging down China lottery sales

The Ministry of Finance says total lottery sales in July were RMB 27.1b (US $4.2b), a decline of 27.3% from the same month last year. Welfare lottery sales fell 10.6% to RMB 15.6b while sports lottery sales fell 42% to RMB 11.5b. For the first seven months of 2015, overall sales are down 0.4% to RMB 214.7b.

Just eight of China’s 31 lottery-selling provinces and cities reported sales increases in July, with Shanghai leading the decliners by falling 73.8% year-on-year. While some of the year-on-year decline can be credited to last year’s results having been boosted by the 2014 FIFA World Cup, the Beijing-ordered suspension of online lottery sales this spring is also having an effect.

The ‘temporary’ suspension, which has lasted nearly six months now, was sparked by allegations that unscrupulous provincial lottery administrators were failing to register all online sales and pocketing the difference. In June, the National Audit Office saidlottery officials had misused RMB 16.9b ($2.8b) worth of the government’s share of lottery proceeds.

The online suspension has wreaked havoc with the bottom lines of online lottery sites. Shenzhen-based 500.com, which was one of only two operators officially authorized to conduct online sales as part of a government pilot program, reported zero income in its second quarter results.