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Why LeEco’s sports subsidiary poured USD 10M into a Chinese lottery platform

Photo from 8win.com

lesports
Screenshot from Lesports.com

Chinese online lottery platform Zhangyu Caipiao announced that it will receive USD 10 million in Series B financing led by LeEco’s sports subsidiary LeSports, boosting its valuation to USD 100 million.

The two companies will produce online sports betting games for China’s top soccer competition the Chinese Super League, which will be available on LeSports’ platform when the competition kicks off in March.

Wang Leizhong, founder and CEO of Zhangyu Caipiao, or “Octopus Lottery”, said this round of funding will be used to develop new products, expand in the domestic and foreign markets, and improve data mining technology. The company will continue to grow in industries including lottery, sports and gaming.

Founded in 2013, the Beijing-based company offers sports betting games and sports lottery information to users. In addition to basic businesses including lottery services and information sharing, the platform uses big data to drive product innovation. It launched new games, sales channels and customized lottery services by analyzing the buying habits of users and feedback from users. It also built a data center that contains information for each team.

The platform entered the foreign market in 2015 by establishing a subsidiary in London. It received angel investment from Chinese lottery service provider Palm Commerce in March 2013, and Series A financing from Source Code Capital and the CEO of China’s leading public relations firm Blue Focus Group in August 2014.

China’s online lottery industry has seen rapid growth as Chinese online lottery sales totaled RMB 85 billion in 2014, a 102.4% year-on-year increase, said a report by Chinese research firm Caitong Consulting.

Chinese authorities suspended the online lottery business to crack down on illegal activities last February. As a consequence, the online lottery services of 8win.com are still unavailable. Major sellers including the lottery platforms of Alibaba, NetEase and NYSE-listed 500.com have also suspended their online lottery businesses since.

Some speculated that Octopus Lottery’s financing is a signal that the ban on online lottery businesses will soon lift. In January, Chinese authorities announced that companies should prepare themselves for the testing of online lottery sales.

Lei Zhenjian, the CEO of LeSports, said it invested in the lottery platform to provide
better services for Chinese Super League fans. The two companies will produce sports betting products for soccer fans.

It is rumored that LeSports will receive USD one billion in Series B financing in February, and according to a Chinese newspaper 21st Century Business Herald, it is planning an IPO. The company has bought the exclusive online media rights to the next two seasons of the Chinese Super League and sports streaming platform Octopus TV.

Wang Leizhong, the CEO of Octopus Lottery, said the company will create new sports betting games for Chinese Super League fans.

(Top photo from 8win.com)

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