China-based online sports lottery provider 500.com has announced that new regulation in Sweden has caused a steady decline in its revenue for the last six months.
The company’s revenue fell from RMB60.8m to RMB25.4m, causing alarm for 500.com officials.
In order to slow the profit decline, 500.com cut its operating expenses from RMB226.5m to RMB199.1m in the early stage of the last year. They managed to mend their losses by slashing sales and marketing costs (from RM43.0m to RMB24.3m) and by decreasing the cost of the services (from RMB41.9m to RMB33.5m).
Although they undertook these measures, 500.com was hit so hard that they had to announce their losses publicly. Their expenses went up from RMB148.9m to RMB235.6m.
Even before the income tax increase, 500.com reported a loss of RMB235.0m (it grew from 143.8m). Net loss from continuing operations rose from RMB122.2m to RMB234.6m.
Their performance in the second quarter wasn’t much better, their net revenue dropped drastically to RMB11.1m.
It looks like that Swedish new regulation and 500.com’s halt of sport information services in China turned into a disaster for the Chinese company.
In the last three months, operating losses went up to RMB138.3m while the net loss went up from RMB50.2m to RMB141.m.
Despite all this, chief executive Zhengming Pan believes that doing business in China will turn thing around:
“We have entered into framework agreements with Tianjin, Hunan and several other provinces and cities in China to assist them in developing physical sales channels of sports lottery tickets.”
“We also have started operations in Tianjin, Hunan, Hubei, Guangxi and several other provinces and cities in China. We will continue to look for additional opportunities to enhance value for our shareholders.”