BUSINESS

China lotteries grow but online pause means 500.com reports nil income

TAGs: 500.com, China, sports lottery

500-com-nil-incomeChina’s lottery sales grew 5.2% to RMB 187.7b (US $30.7b) in the first half of 2015.

Figures released Wednesday by the Ministry of Finance showed welfare lottery sales rising 4.4% to RMB 102.8b in the six months ending June 30, while sports lottery revenue rose 6.2% to RMB 84.8b.

The gains came despite a 22% year-on-year decline in lottery sales in June, although June 2014 benefitted immensely from activity surrounding the FIFA World Cup. The gains are all the more impressive considering China suspended online sales of lottery products at the end of February after an audit of provincial lottery administrators uncovered evidence of widespread corruption.

The online suspension had a disastrous effect on the second quarter performance of Shenzhen-based online lottery vendor 500.com. On Wednesday, the New York-listed company revealed that it “did not generate any revenue from sports lottery sales” in Q2, which understandably led to a net loss of RMB 81.4m ($13.1m) for the quarter.

500.com CEO Zhengming Pan said the company had “voluntarily and temporarily” suspended its online sales in compliance with Beijing’s order. However, the company stressed that it was one of only two online operators officially authorized by the Ministry of Finance to conduct an online sales pilot program and said that, to its knowledge, this authorization “is valid and has not been revoked or amended” and will hopefully resume by some not too distant date.

500.com’s operating expenses fell as a result of the suspension of sales but RMB 11.8m in share-based compensation tied to employees’ stock options meant overall expenses fell just 2.5% during the quarter. 500.com says it has around RMB 1.14b in cash and equivalents on hand and can therefore conceivably ride out the total lack of income a while longer should Beijing not lift the online suspension soon.

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