Last week, the Shenzhen-based 500.com reported a net loss of RMB 90.9m (US $14.1m) in the three months ending March 31. During Q1, the company generated nil revenue from sports lottery operations, the fourth straight quarter the company has earned bupkis from its principal reason for existence.
Beijing suspended all online lottery sales in March 2015 after uncovering widespread fraud at provincial lottery administration centers. 500.com was one of two companies authorized to take part in an online lottery pilot program, and while rumors have circulated regarding Beijing’s intention to relaunch online sales, there’s been no confirmation of these rumors from official channels.
500.com did report RMB 2.2m ($300k) in revenue via online payment processor Sumpay.cn, in which 500.com acquired a majority stake last December. However, 500.com has since decided it may need that cash to keep its lights on, so it sold its 63% stake in Sumpay at the end of March.
500.com paid $35m for its Sumpay stake in December and sold its stake for $54.7m, a tidy return for a four-month window. 500.com received 20% of this sale price upfront, with the remainder to be paid following Sumpay’s renewal of its online payment license later this year.
The Sumpay sale helped boost 500.com’s reserves, which had fallen as low as RMB 400m at the end of Q4 2015. The company now says it has cash and equivalents totaling RMB 1b ($159m), which should help it withstand the online revenue drought a little while longer.