New York-listed 500.com Ltd said in a statement on Monday it expects its financial results will be “materially and adversely impacted” due to what has been described as a temporary suspension in stages – starting on February 25 and extending across the country on February 28 – of online sports lottery sales in mainland China. The suspension is by provincial sports lottery administration centres.
The sale of China lottery products has also been suspended on other mainland China online platforms, including those of Tencent Holdings Ltd, Baidu Inc and Alibaba.com Ltd.
According to media reports, Alibaba said on Weibo – China’s equivalent of Twitter – that it has suspended sales of all types of lotteries on the Taobao Lottery platform. Tencent Holdings confirmed that all lottery business on its QQ and PC platforms has been suspended.
The sports lottery is a huge business in China. Sports lottery ticket sales on the mainland grew by 32.8 percent year-on-year in 2014, reaching RMB176.4 billion (US$28.1 billion), according to official figures published on January 20.
The 500.com platform – a Shenzhen-based business – isn’t formally licensed to conduct sports lottery sales in China, according to lottery industry sources spoken to by GGRAsia. But it had been tacitly allowed by China’s Ministry of Finance to operate as part of an online pilot programme.
500.com said in its Monday statement: “The company plans to continue processing online orders for lottery products that are distributed by local lottery stations and represented by paper lottery tickets. As a result, the company expects transaction volume to decrease significantly and in turn the company’s financial results will likely be materially and adversely impacted during the temporary suspension period.”
It added: “The company plans to actively engage in conversation with the competent government authorities with regard to such temporary suspension and will make announcements with updates on the situation once available.”
On the strength of its reported earlier understanding with the Ministry of Finance, 500.com had managed in November 2013 to conduct an initial public offering on Nasdaq. The firm saw its share price rise almost 68 percent on debut, valuing the enterprise at more than US$700 million according to Reuters data.
But on February 25, 500.com announced “certain provincial sports lottery administration centers to which the company provides sport lottery sales services plan to temporarily suspend accepting online purchase orders for lottery products”.
The firm added at the time that the suspension affected “four high-frequency lottery products for which the company currently provides online services.”
500.com said in its Monday announcement: “On February 28, 2015 the company was further informed by the remaining provincial sports lottery administration centers to which the company provides sport lottery sales services that such provincial sports lottery administration centres also plan to temporarily suspend accepting online purchase orders for lottery products.”
At the close of business in New York yesterday, 500.com had a market capitalisation of US$352.17 million. The shares stood at US$10.02 per unit, compared to a 52-week high of US$53.93 per share. The shares had fallen by as much as 11 percent in late trading on February 11, after the firm reported a 44 percent fall in operating profit in the fourth quarter 2014, disappointing investment analysts’ expectations.
500.com said in its Monday statement the suspension of online sports lottery sales was in response to a “Notice on Issues Related to Self-Inspection and Self-Remedy of Unauthorized Online Lottery Sales” issued by mainland authorities.
Gaming industry analysts have previously reported that mainland China has a large black market for sports betting and lottery-style products, citing that the state-sanctioned products offer neither the rates of return to the player nor the in-running betting on live sports events favoured by Chinese gamblers.
Reforming and updating the channels for lottery and sports betting sales to include well-regulated and monitored online sales was seen as one way of improving the efficiency of the state lotteries and helping them compete with unauthorised product, said several analysts.
Jan 19, 2018Two Macau residents have been arrested by the city’s Judiciary Police (PJ) in connection with a criminal complaint that casino chips with a face value of nearly HKD47.9 million (US$6.1...
Dec 29, 2017It could be 2024 before a casino resort is opened in Japan,...
Dec 27, 2017The year 2017 could prove to have been a turning point in...
Oct 25, 2017The deployment of radio frequency identification (RFID)...
Estimated net worth of Lui Che Woo, founder and chairman of casino operator Galaxy Entertainment Group, according to Forbes’ latest ‘Hong Kong’s 50 Richest People’ list