Emperor abandons gambling deal
Albert Yeung Sau-shing's Emperor Entertainment Group has dropped a HK$75 million deal to break into the mainland's growing but fractious market for legal gambling on overseas soccer and basketball games.
EEG had planned to rename itself Dragonlott Entertainment Group after buying a stake in Dragonlott Group, a firm registered in Jersey in the Channel Islands that planned to invest in 51 state-owned Sports Lottery betting shops in Hubei province.
The Sports Lottery is one half of the mainland's state-run duopoly on legal gambling which, combined with the Welfare Lottery brought in 75.5 billion yuan (HK$85.74 billion) in revenue last year. The lotteries are operated on the provincial level and foreign firms typically participate as management consultants on a revenue-sharing basis.
EEG in December announced plans to buy up to 37 per cent of Dragonlott and complete the purchase by March 31, but the deal lapsed because unspecified 'certain conditions are not yet fulfilled', the company said in a stock exchange announcement late Tuesday.
Dragonlott was founded last year by Hong Kong-based investor Johnny Hon, who previously established the Betex Group. Betex was a pioneering investor in mainland state-run lotteries that was delisted from London's AIM market in 2007 after two of its executives were arrested in China and a third went on the run.
Hon resigned as chairman and director of Betex in July of 2008 but remained a major shareholder. Betex and Hon subsequently became involved in a dispute over unpaid debts of GBP750,000 (HK$8.82 million) for which the firm said Hon and his network of Global Group companies were liable. In November Hon and his family members ceased a Betex shareholders.
Shares in EEG fell as much as 6.8 per cent yesterday after the lapsed deal was announced, but recovered to close down 2 per cent at HK$1.01.