Last year, Li Peng voluntarily resigned from a listed company. Previously, he was responsible for lottery related business in this company. His resignation was due to the fact that although the lottery business was designated as a new industry sector of the listed company, the company's willingness to continue investing in the lottery business was extremely low after the main business performance was under pressure, and he himself remained outside the core decision-making level of the company.

Li Peng remembers that when he first joined the company, he was not familiar with the lottery business, but attached great importance to it. Li Peng was also full of confidence and formulated a detailed business development plan, but the plan was ultimately not implemented.

Due to its ability to provide stable cash flow and add luster to annual reports, the lottery business has always been favored by listed companies. The Economic Observer found that after 2016, many listed companies such as Hongqi Chain (002697. SZ), Songyang Resources (603863. SH), Laiyifen (603777. SH), Crazy Sports (00082. HK), Yabo Technology (08279. HK), Yixintang (002727. SZ), ST Tianzhe (603721. SH) have all tried lottery business. In addition, top companies such as Alibaba, JD.com, and SF Express have also been continuously expanding their presence in the lottery arena.

But by 2025, while the annual sales scale of domestic lottery exceeds a new high of 620 billion yuan, many listed companies that have entered the lottery track through channels, retail, IP operations, etc. have gradually shrunk their related business layouts.

Why hasn't the seemingly huge size of the lottery market been successfully transformed into tangible performance gains for listed companies? The reasons include policy compliance, trust barriers, financial model adaptation, and channel saturation, among others.

Li Peng said that when listed companies cross the lottery industry, most of them are optimistic about the market size and development space of public welfare lottery. Many participants are guided by the "resource relationship" behind their franchise qualifications to enter the track, and companies regard lottery business as an "industrial investment". However, companies generally underestimate the complexity of the lottery industry, overestimate their adaptability in the field of franchising, lack professional knowledge, and do not understand policy boundaries and regulatory logic.

Who is entering the game, who is contracting

On April 17th, an investor asked on the investor interaction platform: Does the "Pharmacy+Lottery" pilot business currently being carried out by the company (Yixintang) include the category of sports lottery and football betting (football lottery)? What are the main regions where the stores that can sell football lottery tickets are located, and what is the current exact quantity? Is there a plan to expand football lottery sales stores in 2026?

Yixintang responded on the investor interaction platform that some of its stores have launched "pharmacy+lottery" business, including sports lottery sales.

According to its 2023 annual report, as of December 2023, Yixintang has launched a "pharmacy+lottery" business pilot in more than 3000 stores in 8 provinces/cities including Yunnan, Guizhou, Hainan, and Sichuan. The annual lottery sales revenue in 2023 reached 76.98 million yuan, and the lottery business has also brought new customer flow to the stores.

The core logic for listed companies like Yixintang to enter the lottery industry is to rely on their established offline sales network and use lottery sales as a convenient and value-added service for their stores.

Red Flag Chain mentioned that its more than 3600 stores implement standardized management of unified procurement and distribution. In addition to its core convenience store business, it focuses on a differentiated competitive strategy of "goods+services" and has opened more than 80 convenient services such as bus card recharge, water and electricity fee collection, welfare and sports lottery sales.

In July 2025, the leisure snack chain brand Laiyifen reached a cooperation agreement with the leading domestic sports lottery printing enterprise Hongbo Shares. Both parties will rely on Hongbo Shares' lottery industry resources and combine Laiyifen's offline store network to implement lottery sales business.

Li Peng said that such listed companies entering the lottery industry essentially rely on their own channels to do value-added business. Lottery is not their main business, and they do not need to bear excessive transformation costs. It is a relatively stable entry mode.

This is also the mainstream path for enterprises to cross over into the lottery industry. Li Peng analyzed that from the perspective of the participating entities in the lottery industry in the past decade, most of the entrants are enterprises with offline scenes, such as supermarket chains, pharmaceutical retail, marketing and media, sports operations, and logistics giants. They carry out lottery distribution business based on their own sales network.

But having channels does not necessarily mean smooth development. SF Holding and JD.com respectively experimented with the theme of invoicing business in 2017 and 2019, but subsequently contracted their layout due to factors such as channel efficiency and policy adjustments, retaining only small-scale scene cooperation. As the core carrier of Alibaba's lottery business, Yabo Technology, listed on the Hong Kong Stock Exchange, focuses on terminal equipment, payment channel cooperation, and channel operation in its domestic business. In recent years, its business focus has also shifted to expanding into Macau's payment and settlement business.

A sample of a cross-border attempt

Among many listed companies that have tested their lottery business, Songyang Resources is a relatively unique company. As an enterprise mainly engaged in papermaking, it does not have the advantage of offline channels for supermarkets and pharmacies. From the beginning of its entry, it aimed at the core track of lottery game operation.

Songyang Resources entered the lottery industry with the acquisition of Jinling Lecai. In September 2023, Songyang Resources announced that it would change the 50 million yuan capital increase payment already made to Nankun Industrial (the original shareholder of Jinling Lecai) to the equity transfer payment for the acquisition of 20% equity of Jinling Lecai held by Nankun Industrial.

In May 2024, Songyang Resources continued to increase its control over Jinling Lecai and planned to acquire the indirectly held equity of Jinling Lecai by its controlling shareholder. After the transaction is completed, Ledong Technology (a wholly-owned subsidiary of Songyang Resources) will directly and indirectly hold a total of 53.15% equity in Jinling Lecai, becoming its controlling shareholder. Jinling Lecai will also be included in the consolidated financial statements of Songyang Resources. In October 2024, Songyang Resources once again released a plan to increase its lottery business. Ledong Technology plans to invest 20 million yuan in Hainan Lecai, a subsidiary of Jinling Lecai, holding 80% of its equity. The funds are planned to be used to add 50 video instant lottery stores and lay 1000 related equipment in Hainan.

At that time, Songyang Resources stated in the announcement that this transaction was to better promote the establishment and promotion of video electronic instant lottery stores in Hainan Province, in line with the company's strategic goals and diversified development needs, and in line with the company's long-term development plan.

In December 2024, Songyang Resources also stated on the investor interaction platform that Hainan "Paipai Le" is currently the only electronic instant open video lottery in operation in China. Jinling Lecai, as the system operation and gameplay service provider of this project, has completed the demonstration and testing of relevant systems and gameplay, accumulating experience for the development of the industry.

The Hainan Province Sports and Entertainment Video Electronic Instant Open Lottery is currently the only officially operated video instant open lottery in China since the closure of the lottery "Zhongfu Online". It is only available for use in approved sales halls within Hainan Province through dedicated terminals. Its core feature is "buy, open, and redeem".

According to the lottery market data released by the Ministry of Finance in 2025, the annual sales revenue of video lottery in 2025 was only 3.29 million yuan.

Li Peng said that the expansion of Songyang Resources' video instant lottery business has always faced a real bottleneck that is difficult to break through. The establishment of video instant lottery sales channels is constrained by multiple factors such as channel operation approval from Hainan Sports Lottery Center and sales terminal procurement budget, making it difficult for enterprises to independently expand channels according to their own business development needs. This is also the core root cause of the sluggish sales of video lottery for many years.

The offline physical stores of Songyang Resources' layout also failed to achieve the expected performance. In response to the inquiry letter regarding the Shanghai Stock Exchange's 2024 annual report, Songyang Resources disclosed that Songyang Lecai only opened two physical stores in Beijing in 2024, with a total annual revenue of only 96000 yuan. Songyang Lecai is the main entity of Songyang Resources operating offline lottery stores in Beijing.

Li Peng judged that the termination of Songyang Resources' lottery related business was mainly due to changes in the market environment: since 2024, the operating revenue of lottery betting stations has shown a significant decline, and coupled with the difficulty of store revenue covering the financial management costs of listed companies, Songyang Resources ultimately chose to terminate the related business. In 2024, the net profit of Songyangle Color was -1.5092 million yuan, and in the first half of 2025, the net profit remained at -517400 yuan.

At the end of 2025, Songyang Resources announced that the company indirectly holds 51% equity of Songyang Lecai through its wholly-owned subsidiary, with a corresponding subscribed capital of 10.2 million yuan, which has not been paid in; Finally, the equity was transferred to Zhao Xiangyue, the original shareholder and natural person of Songyangle Cai, at a price of 1 yuan. Prior to the transaction, Zhao Xiangyue held 19% of the equity of Songyangle Cai.

The offline store trial of Songyang Resources was not successful, and the relevant cooperation qualifications for the development of video electronic instant lottery system obtained after acquiring Jinling Lecai have also changed.

On February 27, 2023, Jinling Sports announced that the company had formed a consortium with Jinling Lecai to participate in the public bidding of the Hainan Sports Lottery Management Center project. The project contract was officially signed on February 17 of that year, with a validity period of three years.

On December 19, 2025, the official website of the Hainan Provincial Government Procurement Industry Association announced that China Sports Lottery Technology Development Co., Ltd. (hereinafter referred to as "China Sports Lottery") has become the only winning bidder for the "Hainan Province Sports Entertainment Video Electronic Instant Lottery System Operation and Terminal Service Project".

Does winning the bid in the China Sports Lottery mean a change in the qualifications of Songyang Resources' related business?

A senior industry insider analyzed that although China Sports Lottery has won the bid, it is still uncertain whether it will cooperate with Songyang Resources in terms of local channel layout in Hainan after undertaking technical operation and development. However, even if both parties continue to cooperate, constrained by the current framework of the lottery issuance and sales system, Hainan "Paipai Le" will still face the practical dilemma of difficulty in channel expansion.

Difficulty

In Li Peng's view, from collective testing to gradual withdrawal, the lottery industry may seem like a low threshold channel business, but in reality, there are multiple industry barriers that are difficult to break through.

Li Peng, who has personally experienced the establishment of lottery business in listed companies from scratch, believes that companies entering the lottery industry must be prepared for long-term investment and cannot achieve explosive growth in performance in the short term; Short term investment not only fails to establish a stable business territory within the industry, but also affects the trust evaluation of lottery regulatory agencies towards enterprises.

Li Peng told reporters that the primary reason for short-term layout of listed companies is shortsightedness and strategic ambiguity. Due to the pressure on their main business, most companies view lottery as a second growth curve and enter the market with a speculative mindset, without developing long-term plans for deep cultivation. The management team has insufficient understanding of industry rules, and the common problem among cross-border players is the tendency to retreat when faced with setbacks.

Secondly, it is difficult to establish trust barriers in the industry in the short term. The strong regulation and trust oriented nature of the lottery industry determines the long-term investment ability of issuing and sales institutions in cooperative enterprises, which has extremely high requirements.

A lottery industry expert who requested anonymity told the Economic Observer that the lottery industry has a dual entry threshold, one is the qualification, operational strength, and professionalism of the enterprise itself; Secondly, the lottery industry worldwide belongs to the exclusive or franchised industry, and even most of them are directly operated by the state, with strong regulatory attributes. Even if cooperation is open to enterprises, there are strict restrictions on their qualifications and business boundaries. In the domestic lottery regulatory issuance and sales system, the core regulatory and issuance processes face direct supervision from relevant departments, with only some sales channels, pre sales systems, and terminal permissions open to the market. Enterprises can partially participate in offline lottery sales and market-oriented service projects, and cannot directly enter core processes such as issuance and lottery design.

The expert said that some listed companies make misjudgments when entering the lottery industry. They do not want to focus on channel, service, information or supporting product supply, but try to touch core areas such as issuance and operation, which are destined to be difficult to sustain from the beginning.

Beyond regulation, from a financial perspective, the lottery business is also different from the vision of many listed companies. The expert stated that the lottery agency business must have sufficient economies of scale to maintain stable cash flow, and companies can only include agency commission income in their financial statements. Listed companies carrying out this business also face many practical challenges such as revenue recognition, capital occupation, cost allocation, and input cost deduction.

Although most listed companies in the past five years have failed to meet expectations in their lottery business, Li Peng believes that this does not mean that the value of social capital participation in the lottery industry has been negated. On the contrary, these explorations have clarified industry boundaries, verified feasible models, and promoted the continuous improvement of market-oriented cooperation mechanisms in the lottery industry for newcomers.

(At the request of the interviewee, Li Peng is a pseudonym)