A reported move by gambling tycoon Stanley Ho Hung-sun to take a controlling stake in high-technology firm China Online could be blocked by exchange regulators. Mr Ho planned to acquire 33 per cent of listed China Online from leading shareholder China Strategic Holdings with a view to setting up an on-line gambling operation, a report said. The acquisition price for the shares was put at 28 cents, a 9.8 per cent premium to China Online's price of 25.5 cents before it was suspended on Thursday pending an announcement of a change in the company's leading shareholder. But a high-level stock exchange source said the venture was unlikely to gain approval. 'Casino gambling is illegal in Hong Kong,' the source said. It could be argued that the business might be out of the SAR's jurisdiction since it would take place in cyberspace. But the exchange source rejected the argument. 'Even if a Las Vegas casino wanted a listing here, we would not approve it,' he said. The source said the approval of China Online incorporating gambling operations would be equal to encouraging gaming in Hong Kong. According to listing rules, an applicant company's business 'must in the opinion of the exchange be suitable for listing'. The exchange used similar reasons to reject a listing application from a night club in the early 1990s, a market source said. Mr Ho could not be reached for comment yesterday. China Online executive director Catherine Ma Wai-man declined comment. China Online, formerly called Star Telecom, had earlier announced that an unnamed individual party and a business partner had proposed to acquire a large stake in the company. The cash-rich firm reaped a $440 million exceptional gain from the sale of 400 million shares in Pacific Century CyberWorks in May. ACQUISITIONS
