LotSynergy-Tabcorp venture to vie for supply of video lottery equipment China LotSynergy and Tabcorp, Australia's largest lottery hardware and software supplier, have joined forces to bid for the right to provide video lottery equipment throughout the mainland. The successful bidder is expected to be announced by the end of this year or early next. Apart from the China LotSynergy-Tabcorp joint venture, all other candidates are leading European and US companies in their fields. John Sun, vice-chairman and chief executive of China LotSynergy, which is a 33 per cent shareholder in the joint venture, said it was hoped the partnership's connections on the mainland and its technical expertise would give it an advantage over rivals. China LotSynergy-Tabcorp, which recently secured a mainland franchise for Keno - a popular numbers game like Mark Six in places such as Australia - is the latest group to declare its intention to bid for the mainland lottery equipment franchise. The central government's recent decision to allow foreign interests to bid for the provision of lottery hardware and software services, and to lift the payout ratio to game players to 65 per cent to 75 per cent, is seen as a move to win over punters from illegal gambling. Ironically, the government is making state-run lottery products more attractive while keeping a low profile in promoting gambling. Little information about the gambling franchise has been released by official news channels. While no official figures have been released, the underground lottery market was estimated to have grown to 600 billion yuan last year and, with a generous payout ratio of more than 90 per cent, had become a major headache for the government. The state-run China Welfare Lottery Issuance Centre, one of only two nationwide licensees, has offered only a 50 per cent payout to gamblers. The joint venture's Keno franchise allows it to build a nation-wide Keno system with 60,000 terminals, 10,000 of which are scheduled to be in service by January. Under the licensing agreement, the partnership is entitled to a service fee of 92 fen for every 100 yuan spent on Keno games for 10 years. Mr Sun estimated the total Keno investment would amount to $600 million, and may rise to $1 billion. However, he expected a substantial part of the cost would be covered by the service fee China LotSynergy would receive if the lottery business grew as expected. A recent Deutsche Bank report forecast that the service fee received from Keno sales would increase to $1.51 billion by the end of 2009.
