AGTech Holdings posted a loss for the first half of 2019 and said revenue declined by 22.7 percent due to lower lottery hardware sales.
The group, which is the exclusive lottery platform of Alibaba Group and Ant Financial, said its loss for the period was HK$116.1 million ($14.8 million) compared with a profit of approximately HK$157.3 million the prior year.
The group attributed the loss mainly to several non-cash and non-operating items relating to the fair value changes of convertible bonds.
Revenue came in at $47.7 million, as a 46 percent decline in hardware sales failed to offset a 46 percent gain in its smaller lottery games and systems division.
AGTech also warned Beijing has been scrutinising online games since last year, which may affect growth.
“We have noted that certain PRC government’s directives were issued to closely regulate the administration of the online game industry and the PRC government had paid attention to the internet industry. This may cause uncertainties to China’s overall games industry,” it said.
It also noted that since the beginning of this year, Beijing has issued a set of operating guidelines for the lottery industry to improve risk management supervision and to promote a responsible lottery.
In the first half of this year, sales at China’s state lottery fell 13.3 percent to RMP212.59 billion, with Welfare Lottery sales, which make up 46 percent of the total, down by 11.6 percent and Sports Lottery sales falling by 14.7 percent.
The group said it was continuing to build on its lottery business in China, leveraging the resources of Alibaba and Ant Financial. It also said it’s continuing to look for expansion opportunities in international markets, having recently expanded into India.