500.com Strives for Profitiability with Social Gaming Acquisition
500.com is hoping that its recent acquisition of a Chinese social poker site will help quell investor worries by bringing the company some much-needed positive revenue. It’s a big move that could be a life changer for the struggling sports lottery giant.
Company officials announced the acquisition of a 51 percent share of Qufan Internet Technology Inc. and Shenzhen Qufan Internet Technology Co. Ltd in a press release on Friday afternoon. The two companies operate in tandem to run their operations.
According to the brief announcement, 500.com will be purchasing its stake in the mobile social poker site in the form of ordinary stock. The entire deal is reportedly worth approximately RMB 110.5m ($16 million USD). The release also mentions that the deal is subject to, “certain conditions,” but doesn’t elaborate on what exactly those conditions might be.
One group that’s certain to support to the pending deal is 500.com’s shareholders. After all, the company hasn’t shown any revenue for about the last year and a half and investor patience only goes so far.
The lack of revenue is not necessarily the company’s fault. About a year and a half ago, the Chinese government shut down online lotteries in a number of provinces as part of a larger crackdown on fraud and illegal gambling. 500.com, it should be noted, was operating legally as part of pilot program to see how regulated gaming would work in potentially massive Chinese market.
The government has yet to give any indication as to when the ban might be lifted.