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More Details On Sports Lottery Win For AGTech

|Includes: Agtech Holdings Ltd. (AGTEF), BABA, BIDU, JD, TCEHY

I have little more details of the AGTech's winning bid from China National Sports Lottery Center to lead the national marketing and promotional campaign of instant scratch games.

There is no information about who competed for the bid but I managed to get hold of the document that outlined the requirements (let me know if you can read mainland mandarin and want to take a look)  It was very clear to me that bidders had to be "who's who of China Internet/e-commerce/Technology giants.  Two requirements stood out. 

1. The bidder must have 100 million Monthly Average Users or MAU.

2. The promoter must sell one million scratch tickets to online customers to redeem them at the lottery stores near them. 

That means Alibaba, Tencent, Baidu, JD-Com, Sina, etc.  

The market is not impressed with this win because it's only $3.5 mil contract.  If this was such a lousy business, why did so many industry giants bid for the project?  I can only assume that this win will open many more doors of opportunities for the winner, AGTech.  

I believe this is a new business concept for AGTech.  Using Alibaba eco-system, AGTech can create the business of attracting online customers to offline businesses and vice versa.  And by being the exclusive service provider, AGTech can incorporate group's technology, hardware, services, merchants, advertising, and monopolize the crown jewel. Consumer data.

Meanwhile, the stock price has gotten killed.  I think the closing of Return to Players (RTP) mobile games by all the operators in China including Lucky Buy spooked mainland investors (They sold 45 mil shares in three days Jan 27-29)  I am sure many thought "government investigation" which is a death sentence.  Industry watchers believe that will not be the case this time. 

There are two major initiatives that will drive the business in 2018. 

PayTM's Mobile Game platform, Gamepind   Entertainment starved consumers in India will gravitate towards it, and with Play for Cash games like Rummy scheduled to be introduced over next few months, the momentum will pick up gradually.

Guan Dan Poker: My sense is that company is holding off the launch until "all clear" signal is given by Beijing.  Once it's launched, I expect Guan Dan to attract players quickly.  If you are going to play, why not play for real cash vs. funny money?

World Cup: Given how big soccer is in China, Alibaba has to be involved with the World Cup one way or another.  Given their expertise in gaming, I believe AGTech will be in the thick of things.  

Disclosure: I am/we are long AGTEF. BABA.