Since April of this year, the distribution of instant lottery tickets has become exceptionally difficult, as sales outlets basically have to follow a rationing system to obtain them. The situation has not improved, but has continued to develop to this day.
In the capital, Beijing, a lottery shop’s display cabinet and glass windows appear unusually empty, which were supposed to showcase an array of instant lottery tickets—commonly known as “scratch cards.” The shop, which has the qualifications to sell both China Sports Lottery (“Sports Lottery”) and China Welfare Lottery (“Welfare Lottery”), has been unable to obtain new stocks of scratch cards since the end of April. Scratch cards are a colloquial name for instant lottery tickets in the market, but within the Welfare Lottery system, it denotes a specific category of instant lottery tickets, while the corresponding Sports Lottery instant tickets are called “Top Scratch.”
Over the past year, the sales growth rate of instant lottery tickets has been the fastest among all types of lottery tickets. After visiting several lottery sales outlets on-site, the Economic Observer found that since April of this year, instant lottery tickets have faced severe supply difficulties, which seems to have become the new normal. According to a lottery industry expert, the annual total issuance of lottery tickets is limited by so-called printing costs. As sales have increased rapidly, the supply-demand relationship has become extremely tense.
The printing cost of lottery tickets is the cost of printing the tickets, which is included in the issuance fee. The Lottery Issuance Management Center budgets a certain amount of issuance fees each year and carries out the annual plan accordingly. Taking the Welfare Lottery as an example, the budget for printing and logistics costs in 2024 is 530 million RMB, an increase of 85 million RMB from the previous year, an increase of about 20%, but this is far from the over 80% growth rate of instant lottery tickets in the first quarter.
According to insiders of the lottery system, given the strong sales of instant lottery tickets in recent years, the entire supply chain has been stretched thin. Moreover, this situation is unlikely to improve in the short term. Experts point out that such a supply-demand conflict has exposed deficiencies in China’s lottery management system. To fundamentally solve this problem, it is necessary to reform the current lottery management system, implement market-oriented operations, and endow lottery institutions with more enterprise-like characteristics.
A lottery shop salesperson revealed that currently, every day, there are thirty to forty customers asking whether scratch cards are for sale. Furthermore, when they see the shelves empty, they usually choose to leave. In the past, this lottery shop mainly bought instant lottery tickets through lottery machines, and the manager would inform in advance in the lottery shop’s WeChat group which day which shop could receive how many tickets. However, since late April, the lottery shop has obtained no allocation for about ten days, until early May when they received an instant lottery ticket stock worth 50,000 RMB, which sold out quickly during the Labor Day period. Now, they are once again facing the dilemma of having no tickets to offer.
Another sports lottery shop, only a few hundred meters away from the aforementioned store, has also encountered the problem of ticket shortages since April. The owner revealed that after receiving six books of instant lottery tickets on May 1st, these tickets had all sold out on the same day. Yet to this day, the manager still has not been allocated new tickets or given any purchase information.
Recent surveys have found that many lottery shops in Chaoyang District, Beijing, the capital, are experiencing a shortage of instant lottery tickets, with only a very few shops still retaining a small amount of inventory. This situation is not unique to Beijing, as many lottery outlets in Jinan, Shandong, have also reported similar supply tightness. Lottery sellers reflect that since April, instant lottery tickets have been difficult to fully supply the market, with only a slight improvement in supply in early May.
An interviewed senior expert analyzed that the fundamental reason for the current shortage of instant lottery tickets is the insufficient printing cost. This expert further explained that the domestic lottery management department follows a dual-line management system, which sets the annual issuance budget based on lottery sales performance and then allocates the funds for printing lottery tickets according to the budget. The total printing budget essentially restricts the total amount of printing. The expert pointed out that issuing agencies cannot increase printing volume at will but need to do so in a controlled manner.
According to the 2024 budget report released by the China Welfare Lottery Issuance and Management Center, printing and logistics costs are explicitly used for the production, warehousing, inspection, and destruction of instant welfare lottery tickets. In 2024, the budget for printing and logistics costs is planned to be about 530 million yuan, an increase from the 2023 budget of 445 million yuan. Nonetheless, the increase in the budget still cannot keep up with the pace of the increase in sales of instant lottery tickets. In the first quarter of 2024, sales of instant lottery tickets reached 38.975 billion yuan, an increase of 81.4% compared to the same period last year, with an increase of 17.485 billion yuan.
The aforementioned expert pointed out that if the financial department does not increase the printing cost budget for lottery issuing agencies, the tense supply situation will be difficult to fundamentally improve. The expert also suggested that according to the current budget management policy, if there is a balance remaining in the current issuance fees, they can refer to China’s pre-2000 lottery quota management, that is, when market demand increases, the two lottery centers can apply to the Ministry of Finance in advance to increase the issuance quota. The Ministry of Finance will then decide whether to approve it and the amount to be approved based on market conditions.
According to financial management regulations implemented from January 1, 2013, lottery organizations must execute strictly according to the approved budget, and usually, the annual budget should not be adjusted. In the past year, China’s lottery sales surged to a new historical high, with a total annual sales reaching an astonishing 579.696 billion yuan, a 36.5% increase year over year. The sales of instant lottery tickets even crossed the 100 billion yuan mark, with a growth rate exceeding 100%. However, in the first quarter of 2024, affected by the high base number of 2023, the overall lottery sales growth slowed down to 19.7%, but the popularity of instant lottery tickets still maintained an increase of over 80%.
The craze for instant lottery tickets has sparked lively discussions in public opinion and the market, with some viewing it as an example of the “lipstick effect,” while others consider “scratch cards” to have become a “spiritual opium” for the middle class and young people.
An anonymous lottery industry expert revealed that there is a tight supply of instant lottery tickets in the current market, a situation influenced not only by printing costs but also by the cautious stance of regulatory agencies towards the immense sales volume of instant tickets and the potential negative effects they may bring. The expert pointed out that there is a view that instant lottery tickets are a form of “spiritual opium” that deprives the middle class of funds. Owing to such concerns, the relevant regulatory authorities are focusing on risk prevention and controlling the sales pace of instant tickets.
The expert further speculated that regulatory bodies do not wish to see the sales of instant lottery tickets to surge to a peak, but rather prefer a stable and sustained sales condition. Therefore, it is expected that the tight supply-demand situation for instant lottery tickets may continue for some time.
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