China’s Lottery Ops Report Second Consecutive YOY Revenue Increase

As the investigation into Baidu’s suspected ties to illicit online gaming sites continues, China’s lottery operations reported their second consecutive month of year-on-year revenue increases.

On Wednesday, the Chinese Ministry of Finance announced that the lottery revenues in August totalled just under RMB34.8b (US$ 5.1b), a 2 percent rise from the same month last year but 3.7 percent lower than the amount received in July 2020, which represented the first 18-month rise year-on-year.

The gains of August were entirely attributed to the sports lottery, which increased to RMB21.5b by 2 percent, while the welfare lottery commodity fell to RMB13.25b by 9.3 percent. Overall revenues for the year-to-date are down 30.3 percent to RMB194.8b.

Sales in September will extend the two-month winning streak, but all lottery sales will be shut down by the government for a four-day duration beginning on October 1 for the annual National Day holiday, except for instant lottery items. But don’t count on this four month streak.

After the 2015 “temporary” suspension of online sales, China’s lotteries remain an offline-only commodity. The government is really missing the boat here, as the continuing crackdown on illegal processing of gambling payments has reportedly persuaded a number of major gambling sites that it is no longer worth the cost of doing business to serve the Chinese market.

Speaking of, last week’s news that authorities arrested Shi Youcai, a veteran executive at tech giant Baidu, for allegedly promoting online gambling promotion through the influential search engine of Baidu, continues to reel from China’s tech community.

On Wednesday, the online media outlet Sina reported that after disrupting a local illegal online gambling operation which relied heavily on Baidu to market itself to prospective customers, the authorities became interested in Shi.

The fact that online gambling sites used Baidu to advertise their goods was a ‘open secret’ within the industry, said an analyst close to Baidu. Former Baidu employees have stated that after an eight-year absence, when Shi returned to the organisation in 2019, he relaxed requirements dictating what types of businesses will have access to the search engine.

A number of other individuals have also been detained by the authorities, including Li Zhongjun, Baidu KA’s sales director (large account). The investigation is said to include “all links in the entire business chain of illegal advertising, including advertisers, advertising agencies and Baidu employees.”

A Baidu spokesman told Sina that the company was still finding out what happened to Shi, but stressed that the “attitude towards all violations of laws and regulations is to resolutely crack down and zero tolerance.”

State-run media outlets published op-eds on Wednesday in their typically unsubtle fashion, advising online platforms to “consciously perform their duties and actively assume the responsibility of purifying the network environment.”