Questionnaire answers on the effects of the COVID-19 pandemic lockdown on the lottery and sports betting sectors from:
Yaping Feng, Director General of China Welfare Lottery Issuance and Management Centre
How has the pandemic and the resulting lockdown affected the lottery and sports betting sector?
The Covid-19 pandemic has greatly affected national lottery sales and operation in China. In order to prevent the spread of the virus, we suspended lottery sales and operation for 49 days, including 10-day shutdown during the Spring Festival holiday. Lottery drawings for national lotto and numbers games didn’t resume until March 11th. And our VLT halls have reopened since May 11th.
There are several aspects of the impact. Firstly, our lottery retailers are under more pressure. They lost two-month commission due to 49-day shutdown. Secondly, with the not-yet-lifted ban on internet lottery and the closed lottery shops, players couldn’t continue to play lottery games. We therefore have seen a big decline in our sales, public welfare fund and issuing fees. From January to April 2020, national welfare lottery sales reached 29.978 billion yuan, down 54.1% year-on-year.
What do you believe will permanently change in the lottery and sports betting sector once the pandemic lockdown has been lifted?
Globally, the pandemic is not yet under control or is not going to disappear soon. In Chinese mainland, as we resume production and work, we will adhere to regular prevention and control measures against the coronavirus in our work and daily lives. The pandemic will probably reshape people’s consumer behavior and social behavior, including the consumer behavior of lottery players.
How has the pandemic lockdown affected the working environment of your operation? Do you foresee any permanent changes in how staff will work once the lockdown has been lifted?
When the pandemic peaked in China, we adopted the working arrangements that combined flexible working schedules, working online and working from home. We took various measures, such as disinfecting our offices every day, requiring everyone to keep social distance, wear a mask and conduct body temperature check when entering the office, encouraging video conferencing, and enjoying separately-packed meals in one’s own office.
With work and production resumption, we have returned to normal operations; meanwhile, we still adhere to the prevention & control measures against the virus, including wearing a mask in the office area and social distancing. All provincial welfare lottery centers implemented similar measures. Now employees are embracing more video conferencing, paying more attention to personal hygiene, wearing mask and washing hands often. These changes have no big impact on our work.
Has the lottery sector's fundamental mission of raising funds for good causes been affected by the lockdown?
No. Our fundamental mission has not been affected at all by the lockdown. On the contrary, the role that lottery sector plays in raising funds for good causes is becoming more important and prominent. We believe that more lottery fund may be allocated to public health and disease prevention and control.
Lottery retail points of sale have been among those hardest hit by the lockdown. Even operators with a well-established online presence rely heavily on retail channels to drive sales and acquire new customers. Do lottery leaders need to redefine how their retail points of sale operate?
The covid-19 pandemic has affected our business greatly. However, we believe that retail points of sales will remain an important channel for lotteries over a period of time, under the influence of multiples factors like development history, playing behavior, policies and employment.
Retailers are vital to our business. Lottery regulator, operator and sales organizations did everything we could in different ways to help them mitigate the economic effect of the pandemic and to stabilize the retail channel. The Ministry of Finance, the regulator, allocated a total of 200 million yuan of special funding to support lottery retailers across the country to fight against the pandemic. As a lottery operator, we decided to increase the commission for our retailers from January through April 2020 (January through June in Hubei province) based on the type of games sold. The money comes from the operating fees of each type of games. For instant tickets, we cut the operating fees from 2% to 1% and the 1% goes to the retailer commission. For lotto, numbers, Keno and VLTs, during the four months, all operating fees go to retailer commission. Provincial welfare lotteries also implemented similar measures and allocated special funds to provide local retailers with one-time subsidies or supplies like masks, hand sanitizers, disinfectants etc.
In the long term, while tapping the potential of the existing sales channels, we will explore different types of channels and seek cross-industry cooperation.
Pan-jurisdictional lottery games such as Powerball and EuroMillions, which were once viewed as robust gaming products, have also suffered as a result of the lockdown. What do lottery leaders around the world need to do to protect pan-jurisdictional games in the event of another lockdown?
We have Union Lotto, quite similar to Powerball and EuroMillions. In the event of another lockdown, on the one hand, we need to improve our capacity of providing online training and services. We offered disease prevention and control guidance and online training via an online service platform towards points of sales nationwide. On the other hand, we suggest adding online betting or betting via phones.
The cancellation of major sporting events has been devastating for the sports betting sector. Going forward, do you see sports betting operators embracing new products such as eSports or virtual sports to lessen their reliance on live events?
At the moment, we don’t offer any sports betting products.
Have illegal gaming operators been able to capitalize on the lockdown?
Yes. Illegal gaming, especially illegal online gaming, may increase taking advantage of the pandemic. We suggest that relevant government agencies collaborate in cracking down on illegal gaming.
What regulatory and contingency measures should be put in place in order to protect the lottery and sports betting sector as a whole in the event of a future crisis?
In the Chinese mainland, the ban on internet lottery is not yet lifted. However, we think it’s important to explore the Internet business model to improve sales capacity. For instant tickets, players may order tickets online and have them delivered home. For lotto and numbers games, players may bet via phones or online platforms, and have their slips typed from offline channels. Efforts could also be made in facilitating the approval of new games, accelerating the launching process into the market, establishing online training system and improving service.
How do you feel the WLA can best help its members in the event of a future lockdown?
We think WLA could first summarize the experience, measures and information regarding pandemic prevention and control, lottery sales resumption, and how to encourage players to purchase again etc. Then WLA could strengthen sharing and enlarge exchanges through e-conference or network database or other means to help the lottery community guard against risks.