M W article23 Apr 2016 16:28
At last, after more than a year in limbo, DJI Holdings (DJI) is right back in the game in China. It could quickly come roaring back to life.
In a radical assault on illegal games, the Chinese authorities suspended the enormously popular online lottery sales throughout the land early in 2015, depriving the legal operators like DJI of a massive chunk of their business. Now, in effect, DJI is back in the game.
After months of trials, DJI's 50% joint venture Qingdao Baifa is to collaborate with Shandong Sports Lottery, the lottery authority in Shandong Province, to promote the first Ministry of Finance approved mobile lottery sales app throughout the province, the third largest in China. Online lottery sales remain suspended, but are expected to be allowed to return in the months ahead. In practice, mobile lottery apps are taking over from online games, so the ban is effectively coming off.
Shandong has 15m lottery players and the second highest sports lottery sales in China with an 11% market share, of which mobile accounts for 40% and rising. Mobile phone penetration is close to 90%.
The Shandong Sports Lottery is one of only three mobile lottery apps approved by the Ministry and the only one authorised to sell Big Lotto, China's most popular sports lottery draw, and Jingcai, the football betting game which is the fastest growing lottery game in China. The rapidly growing popularity of football in China was the main driver in nearly doubling online sports lottery revenues in Shandong in 2014 - before the suspension - to about £715m.
DJI has been especially astute in riding this trend, forming partnerships with Arsenal and Manchester City to support the Shandong mobile app with special content and prizes, and further big gains in revenue are expected with the Euro 2016 tournament this summer.
Qingdao Baifa is expected to generate significant revenues in 2016. Despite limited availability, the official app generated sales of £4.4m a month during restricted trials. The joint venture plans to step up marketing significantly, working with China Mobile (62m users in Shandong Province), China Unicom (32m users), and China UnionPay, the country's only bank card operator.
DJI will contribute to marketing costs and provide technology support and developing promotion strategy and such. DJI's technology and operating abilities are important in gaining market share, and in bringing in major partners. Clearly there could be scope for further contracts and alliances.
It has been a tough year for DJI, but prospects have suddenly changed dramatically with the mobile app permission. The full online lottery business is likely to swing back later this year, and the elimination of illegal sales, which were far greater than the legal business, promises a massive boom in business for the officially approved players who have come through the test. The Chinese are devoted gamblers, and DJI has secured a key position in the indu
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