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AGTech, Reading Between The Lines Of Lottery Officials

|Includes: AGTEF, Alibaba Group Holding Limited (BABA)

Politicians have a language of their own.  What they say, how they say, the choice of words. may all lead to different messages.  

People's Daily <China's official newspaper> reported on the opening ceremony of the lottery outlet in Guangdong.  Look at these words People's Daily used.

To actively promote the development goal of “Building a Responsible, Trustworthy, Healthy and Sustainable National Public Welfare Lottery” and promote the development of the sports lottery industry, Dongguan Sports Lottery has cooperated with AGTech to achieve resource sharing and advantages.  Meaning, AGTech is a responsible and trustworthy partner that understands the government's objective of running healthy and sustainable lottery games for the benefit of public welfare.

The relevant person in charge of the Dongguan Sports Lottery Center said that by increasing the lottery business in the retail format, it can increase customer traffic, increase the commission income of retail owners, and expand social employment, reduce the operating cost of the real economy, stabilize the real economy, and improve the quality of people's livelihood. It is of great and far-reaching significance to increase the charity fundraising.   

The actions of lottery officials also speak volume about what they want. Resumption of Internet Lottery Sales.  The Provincial leaders started working with Alibaba Group this year to attract online consumers to offline lottery stores.  This is the best way to attract younger customers since the Internet Lottery Sales are still banned.  Before the ban, the lottery sales were growing 25% CAGR, and it was mostly due to Internet Lottery sales that were growing better than 70% CAGR.  The lottery officials know that they need to reach younger players and the best way to do that is through the internet.

Internet Lottery Sales is all ready to go.  The Industry has been cleaned up with crooked players and politicians locked up.  The National platform built and tested (Q1 2018).  Alibaba-AGTech has systems in place that can handle more than 300k transactions per second.  Their system has also been tested through Instant Scratch Game (DDG) that a player can use their mobile phone to verify their winning ticket and self-redeem by having the winning deposited directly through Alipay account nationwide (Q2 2018). 

Every day the Internet Sales doesn't resume, government (Local and Central) lose tax revenue (30%) because the players are going to the underground games where no one pays any taxes.  The illegal operators play by their own rules, and the safety and wellbeing of the citizens are not guaranteed.

With Central Government continuing to clamp down on real estate speculation (the biggest source of revenue for provinces) Beijing needs to offer an alternate source of revenue to provincial government and lottery is a safe, guaranteed option.

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