Legal online sports betting could be heading for China, as several operators initiate IPO launch plans. It’s been reported that local operator 500.com received tacit approval of China’s Ministry of Finance to roll out a gaming platform for internet sports betting on the mainland and seeks to raise $150m on the NYSE.
Shenzhen-based sports-lottery site 500.com provides interactive betting services on desktop and mobile applications. It works with the national Sports Lottery as one of only two entities authorised by the MOF to provide online lottery services for the China Sports Lottery Administration Center. The company’s regulatory filing showed its user-base more than doubled to 18.4 million and sales increased 25-percent from a year earlier in the nine months through September.
The IPO will be managed by Deutsche Bank AG and 500.com plans to utilise the proceeds for technology upgrades and marketing. IPO requests were also announced by Chinese internet businesses 58.com Inc. and Qunar Cayman Islands Ltd. A Guangzhou-based provider of mobile applications, Sungy Mobile Ltd. also filed to list on the NYSE, to raise up to $80m in an IPO.
Continuing its collaboration with the national Sports Lottery, one of the only legitimised forms of gambling in China, 500.com will add random outcome games and sports events to its online lottery portfolio. However, one of the main barriers to building the legal sports betting business is that the return to player is less competitive than international bookmakers. The mandatory maximum return to player of 69% falls shorts of typical 90%+ rates on global offerings.
This does not dismiss the potential size of a market. According to the MOF, lotto sales in China were about $36bn during the first nine months of the year. Other unregulated players that have been operating in the marketplace have reportedly made significant profits without regulation of the sector. Chinese media recently told of a single unlicensed online bookmaker taking ‘in-running’ bets on the mainland, to have made a $1.8m profit on 1% of players’ losses.
