Multilotto’s UK Subsidiary Surrenders UK Gambling Commission (UKGC) License

Chinese online sports lottery operator 500.com’s acquisition of The Multi Group Ltd (TMG), operators of the Multilotto online lottery and casino business proved a success. In the annual third quarter, the company earned 95% of its revenue from Multilotto. This figure could come crashing down as its UK subsidiary has recently surrendered its UK Gambling Commission (UKGC) license. Its European expansion strategy is feeling the pinch.

The company’s website suggested that it would halt its casino activity temporarily as of September 30th. However, its UK’s lottery betting operations site appears to be active and displays a UKGC logo, signaling its affiliation with the regulator. Multilotto’s casino operations in Malta will shut down on November 18th.

The company continues to burn its cash reserves while narrowly lowering losses in the third annual quarter of 2019. The Nasdaq-listed company released its financial report for this quarter on Tuesday, earning revenue of RMB 9.8 million ($1.4 million).

For the three-month period ending September 30th, the company’s revenue was RMB100k better than this quarter in 2018. Its operating losses went from RMB138.3 million in Q3 2018 to RMB98.4 million in Q3 2019. The net losses also improved year-on-year, going from RMB137.8 million in the third quarter last year to RMB95.8 million this year.

The Shenzhen-based company has struggled to make ends meet for four straight years. In early 2015, the Chinese government unveiled a massive corruption scandal in provincial lottery administrators. It banned all online lottery sales, hurting the company’s core market. 500.com was one of the two companies authorized by the government to sell lotteries online. However, the market was crowded with numerous illegal lottery platforms.

The company recently released a blue paper, discussing a new proprietary solution for lottery operations in China. The company intends to use blockchains to reduce instances of fraud in the market. Its CEO Zhengming Pan expressed his commitment towards promising initiatives to grow company revenue.

While 500.com depends on its long shots to pay off sooner than later, its share value has eroded by two thirds. At $9.72, the share price has tumbled 80% from its 2014 high of $49.50. Meanwhile, its cash reserves are down by 25% quarter-on-quarter.

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