Chinese regulators clamping down on online lotteries

The news earlier this week that 500.com had temporarily suspended online lottery operations at the request of regulating authorities (see previous report) has been followed by reports of similar suspensions on other companies in the lucrative market.

Alibaba Group Holding Ltd announced Saturday that it had suspended online lottery sales due to pressure from industry regulators, cancelling Tabao.com sales to comply with an order from welfare and sports lottery authorities, who operate separately under the umbrella of the government’s Ministry of Civil Affairs.

Tabao’s Weibo account advised interested parties: “We will redeem winning tickets already sold and clients who have pre-paid later rounds will get a refund in, at most, 5 working days.”

A spokesman for the General Administration of Sport approached by the publication China Daily said that the organisation was cracking down on illegal online sports lottery sales, pointing to a directive from the Ministries of Finance and Civil Affairs instructing lottery administrators to review their operations and licensees and correct any irregularities in online lottery activity under their supervision.

The publication Sina.com reports that several provinces suspended online lottery activity after receiving the central government directive, believed to be part of the massive government drive against corruption and waste which is currently in progress and has battered Macau gambling revenues.

China Daily notes that online lottery sales have rocketed in China, at least in part due to the wide availability of smartphones and the convenience these bring to financial transactions.

Sports lottery turnover grew almost 33 percent and came close to 175 billion yuan (US$28 billion) last year, easily outstripping industry estimates of 100 billion yuan, according to official figures. Sports lottery wagering accounts for nearly half of total lottery sales in China.

The sports lottery was introduced to raise funds for the 1990 Asian Games in Beijing, with net proceeds channeled into public welfare projects.