Bet365 and Paysafe Deny Illegal China Ops
Posted on: December 17, 2016, 02:00h.
Last updated on: December 16, 2016, 01:30h.
Bet365 and Paysafe have strenuously denied engaging in illegal gambling operations in China.
The denials come following the publication of a note by US firm Spotlight Research, which accused Bet365 of “operating a business that appears to facilitate and engage in illegal gambling.”
Spotlight, which disclosed a potential short interest benefiting from any weakness in Paysafe’s share price, said that the payment processor “appears to be enabling both illegal gambling and Chinese capital control evasion through alleged undisclosed related parties run by recent former executives.”
Bet365 is Paysafe’s biggest customer; the online gambling giant’s customer transactions represent some 50 percent of its business through its Neteller, Skrill and the Income Access digital payment brands.
If Spotlights intention was to weaken Paysafe’s shares, it was successful.
On Tuesday, the day the note was published, the company’s stock plunged by one third.
What is Short-selling?
Short-selling is a process that involves borrowing securities, typically through a broker, selling them, and then buying them back in the event that they depreciate in value. Since they are now worth less than their selling price, the short-seller can pocket the difference.
While the practice is arguably unethical, it’s not illegal because evidence suggests that prohibiting short-selling actually has an adverse effect on the market.
Paysafe quickly responded, noting Spotlight’s vested interest in messing with its stock. “All material information in the report is either factually inaccurate or has been previously disclosed,” it said in an official statement.
“[Paysafe] has a history of significant, transparent disclosure to the market, publishing two prospectuses in 2015 and being subject to substantial additional scrutiny through a full UKLA listing process as part of its move to the Main Market of the London Stock Exchange,” it added.
“Self-serving, Misleading and Inaccurate”
While Bet365 does not deny accepting bets from Chinese customers, and never has, it emphasized to iGaming Business, Thursday, that there is “no legislation which expressly prohibits the supply of remote gambling services into China by operators who are based outside China.”
“Bet365 has no people, assets or infrastructure in China and does not engage any agents, aggregators or intermediaries, for any purpose, in China,” it continued. “In the view of Bet365, and its lawyers, Chinese law does not extend to the provision of services into China by gambling operators and service providers who themselves have no nexus with the territory.
“Accordingly, Bet365 considers Spotlight Research’s analysis of the relevant legislation and statements surrounding the alleged illegality of the provision of remote gambling services into China remotely to be self-serving, misleading and inaccurate.”
In 2014, the UK’s Guardian newspaper reported that Bet365 had been taking bets from Chinese citizens through obscure domain names designed to avoid government web censorship.
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