500.com posts widened loss on impairment provisions

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China lottery service provider 500.com has continued to suffer from the suspension of online lottery in the country, posting a widened net loss of RMB137.8 million (US$19.6 million) in 19Q2. 

500 said the widened loss was due to an impairment provision of RMB57.2 million for goodwill during the second quarter of 2019 and a reversal of uncertain tax liabilities of RMB20.7 million during the second quarter of 2018. 

The company, however, said it has been engaged in “new and promising” initiatives to widen its revenue base, such as the acquisition of The Multi Group (TMG) in 2017, and an agreement with CSLA to develop physical channels to sell sports lottery tickets.

Despite this, net revenues fell 63.5 percent to RMB11.1 million in the second quarter of 2019. 

500 said revenue in the quarter came primarily from revenue contribution from the Company’s online lottery betting and online casino in Europe through TMG, which accounted for 99.1% of total net revenues. 

The year-on-year decrease, however, was due to a website migration of the TMG website, which forced users to re-register, causing an RMB16.1 million decrease in revenue. 

The company said it also ceased its operation of sports information services in China in March 2019, resulting in an RMB3.1 million decrease in revenue.