Swedish suspension weighs on 500.com performance in Q3
Revenue declined to RMB6.1m (£700,398/€788,051/$936,307) in the three months to 30 September, of which the Swedish-facing online lottery betting and casino operations, via its The Multi Group (TMG) subsidiary, contributed RMB3.3m.
This followed TMG successfully renewing its Swedish licence in mid-September. The business had been forced to halt operations in January, after an administrative error saw it fail to renew the year-long licence that came into effect from January 2019.
The rest of the quarter’s revenue came from sports information services in China, which accounted for the remaining RMB2.8m generated in the quarter.
However, revenue was wiped out by operating costs, even though these declined 29.0% to RMB56.2m.
Operating costs largely stemmed from a 7.7% rise in general and administrative expenses, to RMB46.4m, the only item to increase year-on-year. This was offset by steep declines in revenue-related costs, sales and marketing, and service development expenditure.
Other operating income declined to RMB487,000, and once this had been factored in alongside a RMB246,000 government grant and RMB892,000 in other operating expenses, 500.com’s operating loss was almost halved to RMB50.2m.
After financial items, the business’ pre-tax loss narrowed to RMB43.4m, down from RMB95.8m in Q3 2019.
Once 500.com’s loss from non-controlling interests and foreign currency translations were factored in, the business comprehensive net loss came to RMB50.9m, a 40.5% improvement on the prior year.
Following the end of the quarter, the business concluded an investigation into bribery allegations, carried out by law firm King & Wood Mallesons (KWM). This focused on a trio of consultants working for the business, who were suspected of bribing a member of Japan’s ruling Liberal Democratic Party to gain an advantage in the country’s integrated resorts tender process.
The allegations led to the resignation of the operator’s chairman and chief executive at the turn of the year, but 500.com’s special investigation committee concluded there was insufficient evidence of wrongdoing.