Lottery industry leader AGTech partners logistics giant SF Holdings to explore China lottery market

A nationwide new lottery product, SF-Themed Lottery, will launch in Guangdong, Jiangsu, Hunan and Jiangxi first

It was announced in Hong Kong on 26 April 2017 that the Hong Kong-listed integrated lottery technology and services company AGTech has teamed up with SF Holdings, setting up a JV called SF Lottery to launch a new nationally-approved, theme-based instant scratch lottery product called "SF-Themed Instant Scratch Lottery". The new product will be launched on behalf of China's National Sports Lottery Centre. AGTech and SF are exclusive business partners for such business and will utilise AGTech's integrated lottery technology and service expertise and SF's relevant channel resources to develop the instant scratch lottery business in China. According to the parties, SF Lottery has entered into a cooperation framework agreement with China's National Sports Lottery Centre to work jointly in areas such as themed instant scratch lottery design, distribution of instant scratch lottery, system synchronization, warehousing and delivery on a nationwide basis. SF Lottery has assisted the National Sports Lottery Centre in the design and development of SF-themed instant scratch lottery and, of major significance, SF Lottery has also signed contracts with the Sports Lottery Administration Centres of the market leading provinces Guangdong, Jiangsu, Hunan and Jiangxi to sell SF-Themed Instant Scratch Lottery on a commission basis. The new lottery product has been examined and approved by the Ministry of Finance of the PRC.

The collaboration between SF Lottery and the national and local lottery authorities in China represents a new business model which will see lottery products fully integrated into a national logistics network for the first time. SF Lottery aims to establish a new national vertical logistics system which will help to enhance the efficiency of the management, logistics and delivery of the SF-Themed Instant Scratch Lottery, as well as being favourable and complementary to the National Sports Lottery Centre's existing system for instant scratch lottery. The companies are excited that SF Lottery's innovative self-service redemption model will provide instant scratch lottery players with a brand-new redemption experience, complementing the traditional redemption model in physical stores and enhancing the experience of instant scratch lottery services for the public.

According to the public information provided by China Ministry of Finance, during 2016, sales of sports lottery in the four launch provinces of Guangdong, Jiangsu, Hunan and Jiangxi reached RMB45.5bn., representing 24% of the sports lottery market in China. Meanwhile, in 2016 sales of instant scratch lottery amounted to RMB28.5bn. in the PRC (equivalent to approximately US$3.5 per capita), 7.2% of total lottery sales. In previous years this proportion was considerably higher, accounting for 18.6% of total sales in 2010, for example. It is understood that relative to other countries, the current sales volume of instant scratch lottery in the PRC is modest. According to the public information provided by a world leading gaming company, in the United States, annual instant lottery sales was about US$43bn in 2015, which is equivalent to approximately US$130 per capita. That suggests a significant growth potential in the instant scratch lottery market in China.

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