HONG KONG: Heritage International Holdings, a Hong Kong-listed investment company, is to further tap the fledging lottery market on the mainland amid easing restrictions on institutions' involvement in lottery ticket distribution.

Heritage International plans to expand into lottery-related businesses, by acquiring preference shares from Shanghai-based New Range Investment for a total cash consideration of HK$80 million. Heritage International will hold 75 percent of the shares of New Range upon the completion of the purchase.

New Range is the parent of Newline Heritage, which is engaged in lottery-related businesses, including placing advertisements outside lottery ticket booths and assigning lottery ticket carriers. With the loosened restrictions, the company is aiming to capture a 5 percent market share in the mainland's lottery industry within five years, by developing lottery distribution chain stores and lottery-related media business.

The money will be used to develop these and online lottery business projects, according to the chairman of New Range.

New Range expects the revenue from lottery ticket distribution will amount to 8 million yuan next year.

Separately, the company has signed a contract with the China Welfare Lottery Issuing Center for the renovation of 58,000 sales centers and as exclusive advertising agent of these distributing centers.

"Credibility is the cornerstone in the lottery business," said Benny Kwong, chairman of Heritage International. "New Range's presence in lottery-related media helps to build its reputation and credibility in the business," he added.

"The lottery regulations also clarified government's long-term stance and stable policy in the industry," Kwong said, noting that the issuance of the 2010 World Expo-featured lottery in Shanghai shows the enormous potential in the business.

The mainland has an estimated total of 200 million punters, who can generate 500 billion yuan a year if the market is fully developed.

China's first lottery industry regulations that took effect on July 1 aim at enhancing supervision of the fast-growing lottery industry and weeding out fraud. Before the implementation of the new legislation, lottery ticket distribution was exclusively managed by private individuals, which facilitated fraud and malpractice.

(HK Edition 07/28/2009 page4)