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China Plans to Legalize Gambling Market
Before the 2008 Beijing Olympics, the Chinese Government wants to develop its legal gambling market, rather than watch revenue flow to across-the-border casinos or illegal internet sports betting.
The Chinese gambling market turns over $100 billion, 95% illegally. Like Western countries, China needs to fund an aging population, so pragmatism has won the day, said Richard Li, Sino Director.
A joint venture was recently revealed by Sino, through which it will provide gambling dens to aged-care facilities in 50 cities. With the national charity, China Aged Care Fund (CACF), this venture is also allowed to conduct a national poker tournament.
In October of last year, Sino bought Lottery operator China Entertainment Holdings (CEH), whose main asset is the right to market Keno and Lotto products in the Shanghai district. CEH runs 370 outlets and still aims to reach 750 by the end of the 2006 calendar, from entrepreneur Teddy Cheng in a $6 million scrip deal to enter the Chinese gaming market.
From around $0.20 in June of last year, Sino shares grew to as high as $5.59. At current levels, Sino is valued at over $200 million on a fully diluted basis. CEH's goodwill, in effect its lottery right, accounts for $70 million of Sino's net assets of $118 million.
Sino has several options to fund the multi-function entertainment center (MEC) and poker rollout, but will try to outsource most of the expense. For instance, internet cafes already have the terminals, so according to Li, all they need is the poker software.
Sunday, December 17 , 2006
Victor Copeland