But some insiders doubtful that betting will be legalized soon

Competitors spur forward at a horse-racing festival in Wuhan, Hubei province, in October 2013. Ke Hao / Xinhua

A working group for a horse racing lottery was established recently in Beijing, a step seen by business as a positive sign pointing to eventual legalized betting on horse racing on the Chinese mainland.

A horse racing lottery would enrich the types of sports lotteries available in China, and all of the income generated would go toward State finances, charity institutions and the horse racing industry, according to People's Daily.

The working group has been set up under the China Jockey Club, which claims on its website that it is "authorized by the Chinese government" and is "the only horse racing authority on the Chinese mainland responsible for the promotion and development of the horse racing industry".

The club was not reached for comment.

The club's overseas secretary-general, Stewart Hosford, said establishment of the working group "sent out a very strong message that this is fully authorized", since the launch was held at "a very prestigious building close to Tian'anmen Square", according to the Telegraph in London.

The first international horse race under the club's stewardship is expected to be held in Shanghai in July of next year, said People's Daily.

Encouraged by this news, the price of some stocks of the horse racing industry increased by their daily limit on Thursday, including shares of Jiulongshan (600555 on the Shanghai Stock Exchange) and Pearl River Enterprises Group (Shanghai 600684).

Lottery sales in China are strictly limited to a few authorized sellers with limited products. During the World Cup in June and July, a rush by Chinese to gamble on games pushed lottery sales up sharply. According to the Ministry of Finance, sports lottery sales surged by 92.9 percent from a year ago to reach 19.7 billion yuan ($3.23 billion) in July.

However, some industry insiders were not so sure about the likelihood of a horse racing lottery.

"It is unlikely that the Chinese government will loosen limitations on a horse racing lottery soon," said Cheng Yang, a lottery industry specialist.

He said this would not be the first such trial for a horse racing lottery. Since the 1990s, there have been trials of betting on horse racing in cities such as Guangzhou, Chengdu, Wuhan, Shanghai and Nanjing, but all failed.

Three government documents banned gambling on horses, in 1992, 2000 and 2002. Cheng said that fraud and security concerns were the major reasons behind the crackdown.

Li Jian, co-president of Caitong, a lottery industry consulting firm in Beijing, agreed. He said the major reason is the lack of both a proper regulatory system and a mature horse racing industry on the Chinese mainland.

"I think the mainland is not ready for a legitimate horse racing lottery from the government level to the industry itself," said Li. "From the government level, we don't have a supervisory body or related regulations. There is no specific proof that the club is backed by the Chinese government.

"And the horse racing industry contains different sections, such as the racing horses, racing course and jockey," Li added. "The Chinese mainland doesn't have a long history in this field. It still needs time to develop a mature industry."

suzhou@chinadaily.com.cn