Chinese online lottery firm bets on mobile Internet

China's online sports lottery vendor 500.com plans to add more social networking features to its lottery sales platform ahead of the FIFA World Cup and expects more sales from mobile devices, the company's chairman said in an interview with Xinhua. Vincent Law, chairman of the Shenzhen-based 500.com, said the company expects to grow its user base during the soccer tournament in Brazil. However, he said the company had no specific sales target for the sport event. "Soccer fans might not use our site to buy lottery tickets, but they can use our platform to network with other fans, and discuss matches or a particular player," Law said. 500.com has also sold more than 3 billion yuan (488 million U.S. dollars) worth of sports lottery to more than 20 million registered users last year and is paying more attention to the mobile front. The company signed an agreement in January with China Mobile E-commerce, the payment subsidiary of China Mobile, the country's largest mobile operator by subscribers. The deal opens up a new payment channel for 500.com and could potentially boost its sport lottery sales on mobile devices. The payment service has a monthly active user of 31 million and annual transaction hit 130 billion yuan in 2013. Prior to this deal, 500.com also accepts payment through Alipay, the payment service offered by Chinese e-commerce conglomerate Alibaba. The company has both Apple and Android apps and has been working to incorporate its lottery sales service on other popular apps with broad user base, such as Alipay. 500.com is among the first batch of Chinese online lottery vendors established in the early 2000s. It went public at the New York Stock Exchange in November 2013. Its share price has more than doubled three months after its debut and hit as much as 51.37 U.S. dollars per share in early January. This strong performance shows investor confidence in the company and the potential of China's online lottery sector. Chinese regulators have also become more clear over support for online lottery sales. Two kinds of lotteries are legal on the Chinese mainland, one for welfare and the other for sports. Proceeds are used to fund charitable causes and mass sport education programs. Lottery sales have grown more than 10 percent in China for the past decade and exceeded 300 billion yuan last year, up 18.3 percent from a year ago, statistics from the Ministry of Finance shows. The ministry did not disclose the share of lotteries sold online. According to consultancy iResearch, sports lottery sales at 500.com account for 29 percent of total online sports lottery sales in China during the first half of 2013. The company said in its 2013 financial results that mobile-registered users account for 67 percent of active users during the fourth quarter of 2013 and their purchases represent around 18 percent of total lottery sales at 500.com. A government-mandated ban on online lottery sale that went effective on March 1, 2012 aimed to weed out illegal activities such as gambling or scams. 500.com said in its 2013 financial results that it "voluntarily suspended online lottery sales services" when the ban was introduced. The company walked out of shadow of regulatory uncertainty after the Ministry of Finance gave it the go-ahead to resume its online sports lottery sales in November 2012. Such regulatory approval has cleared investors' concern that the company's development could be derailed without a nod from regulators. Meanwhile, an amended version of a regulation on lottery issuance and sale in early 2013 granted legal status to online lottery sale, adding to investors' confidence that the sector is set for robust growth in the years ahead. So far 500.com is the only Chinese online lottery vendor that has gone public. Law said the move has "a positive effect on the entire industry." "Little is known about online lottery. If there is any information, it's mostly negative. A public listing subjects the company to scrutiny from investors and regulators and offers greater transparency."