Struggling online lottery operator 500.com has made another attempt to diversify its business model by acquiring the parent company of Nordic-facing online gambling operator Multilotto.com.
On Friday, the Nasdaq-listed 500.com announced that it had reached a deal to acquire 93% of the outstanding shares of The Multi Group Ltd, the Malta-headquartered parent of Multilotto. The deal, which is worth €49.8m (US $56m), is subject to regulatory approval.
Multilotto offers lottery betting and online casino services via a Curacao eGaming license. Multi Group also holds online licenses issued by Maltese, UK and Irish gaming regulators. In 2015, the company reported revenue of €4m and earnings of €1.2m, while 2016’s revenue rose to €10m and earnings improved to €5.7m.
500.com stressed that Multilotto doesn’t accept customers from China, including Hong Kong and Macau. Until China imposed its ‘temporary’ suspension of online lottery sales in March 2015, the Shenzhen-based 500.com was one of two companies authorized to take part in a ‘pilot program’ of online sports lottery sales in China.
The suspension has wrought havoc on 500.com’s bottom line. The company reported a net loss of $52.3m in 2016 and announced earlier this month that it had lost a further $9.3m in Q1 2017. Last November, 500.com acquired social poker operator Qufan Internet Technology Inc. in a bid to keep the lights on while it awaits Beijing’s approval to recommence online lottery sales.
China’s Ministry of Finance has been conducting field trials of mobile lottery sales in a number of provinces, and recently concluded a two-year trial in Jiangsu province. The government reportedly concluded that the trial demonstrated no significant risk but when that conclusion might translate to a market-wide restart of online lottery activity remains anyone’s guess.
The Ministry reported April’s overall lottery sales were up 9.6% to RMB 38.2b ($5.55b), with sports lottery sales rising 15.2% to RMB 19.5b and welfare lottery up 4.3% to RMB 18.7b. For the year-to-date, overall sales are up 6.2% to RMB 133.5b.
