The venture capital firm plans to up its overall equity interest in the China Gloria Consultant group of companies from 20 percent to 50 percent for the group's businesses in Shanghai, Chongqing, Haikou, Heilongjiang Province and the online business.

CGC is one of few legal lottery operators on the mainland with more than ten subsidiaries and branches in Beijing, Shanghai, Wuhan, Chongqing, Guangzhou, and the provinces of Sichuan, Heilongjiang, Hainan, and Shanxi.

SIIS said it has entered into five agreements with CGC, offering different valuations of each local firm to represent the difference in size and potential of the welfare lottery business in each of those markets.

In particular, SIIS will invest HK$198 million for a 50 percent stake in CGC Heilong-jiang. The northeastern province is currently the third-largest market in terms of total welfare lottery revenues generated in China, with revenues amounting to 3 billion yuan (US$375 million) last year.

Following the acquisition, SIIS hopes to expand the lottery service to include the retail sale of traditional lottery products online and over the counter in the coming months.

"Until recently, China Gloria's focus has been solely on the new 'High-Frequency' lottery products such as Video Lottery Terminals, Keno, and Instant Scratch," the company said in a press release.

Traditional lottery accounts for 95 percent of the market, but SIIS expects the new products to grow rapidly and eventually take up 50 percent of the China's welfare lottery market.