DJI Holdings' revenues hit by Chinese online lottery ban

London-listed DJI Holdings posted a 38% decline in net revenues for H1 after the Chinese lottery supplier felt the impact of a government suspension of online lottery products in China.

In March the Chinese government temporarily suspended the sale of lottery products online throughout China while a review of the online market is conducted ahead of the introduction of new legislation.

DJI’s net revenues were down to £2.1m for the first six months of the year as a result, with a net loss of £3.4m for the period compared to £2.3m in H1 2014. Meanwhile gross sales were down 35% to £86m.

“Against the background of a strong performance in 2014, the temporary suspension of online lottery sales has materially and adversely impacted our operating results and our financial position in the first half of 2015,” Darren Mercer, DJI chief executive, said.

Mercer added the firm was working hard to diversify its offer away from online lottery, but remained upbeat about longer-term prospects. He also said the firm was moving to strengthen its position in the lottery sector “to enable us to fully capitalise on the resumption of online lottery sales once the suspension has been lifted”.

There is currently no date set for the lifting of the suspension, although eGaming Review understands the Chinese government is open to regulating and taxing the sector.

The suspension has hit those firms operating in China’s online lottery space hard, with the share price of New York-listed operator 500.com having halved since June.

Previously a number of firms had exploited a loophole in Chinese law – which prohibits all forms of gambling but doesn’t consider state lotteries to be in this category – to expand online offers which even including basic sports betting products.

Earlier this month DJI Holdings agreed a deal to become English football club Arsenal’s official lottery partner in China in a move which signalled confidence in the longer-term prospects of the sector.