bet365 withdraws from China grey market

Global Online Sportsbook Bet365 Shifts Focus from China to Regulated Markets

In a strategic move to enhance its growth trajectory, Bet365, one of the leading global online sportsbooks, announced that it will cease taking bets from Chinese customers effective Thursday, March 27. This decision reflects the company’s commitment to adopting a focused strategy that prioritizes legal markets, specifically targeting burgeoning opportunities in the United States and Brazil.

Founded in 2001, Bet365 has navigated the complex landscape of online gambling in China, where gambling is largely prohibited, with exceptions made for the special administrative regions (SARs) of Macau and Hong Kong. Despite these restrictions, a recent Financial Times report highlighted the substantial financial allure of the Chinese market, labeling it a “cash machine” for the family-run business led by CEO Denise Coates. With the saturation of UK sports betting, Bet365 has aimed to capitalize on less regulated territories.

According to findings by Regulus Partners in 2014, China was possibly Bet365’s second-largest market after the UK, contributing less than 20% of its revenue at the time. This underscores the complexity of operating in a jurisdiction where legal gambling is tightly controlled yet generates significant interest.

Evasion Tactics: Mirror Sites and Regulatory Challenges

A 2022 article by Business Insider detailed how Bet365 emerged as a key entity in China’s clandestine online gambling scene. The company, along with other international competitors, utilized a network of “mirror sites” managed by subsidiaries to circumvent governmental restrictions. Each time Chinese authorities blocked a site, a new one would promptly surface, prompting industry expert Ben Lee from IGamiX Management and Consulting in Macau to describe the situation as a “game of whack-a-mole.”

Despite persistent scrutiny, Bet365 has consistently maintained that it operates within the bounds of Chinese law. In a statement to the Telegraph in 2020, a Bet365 representative argued, “There is no legislation which expressly prohibits the supply of remote gambling by offshore operators into China. Our legal interpretation is that Chinese law does not extend to services provided from offshore.”

Embracing New Opportunities in Regulated Markets

For Bet365, the decision to withdraw from the Chinese market opens avenues for growth in more predictable, regulated environments. The company is poised to expand its presence in markets such as Brazil, which officially launched its online sports betting legislation on January 1. In this new landscape, Bet365 faces competition from established players like Entain, MGM, Flutter, and Stake.

However, analysts suggest that Bet365’s primary focus lies in capturing market share within the United States. Alun Bowden of Eilers & Krejcik emphasized that Coates is prioritizing U.S. expansion, with Bet365 currently operational in 13 states. Recently, the sportsbook launched in Illinois just in time for March Madness and plans to begin operations in Missouri this fall. Additionally, on March 24, Bet365 secured a partnership deal with the St. Louis Cardinals, marking its entry as the team’s first mobile sports betting partner.

Market Insights: Why Analysts View China as a Burden

Analysts from Regulus have characterized China as “Bet365’s last material ‘dark grey’ market.” The company’s exit from this space shifts its operational focus to a portfolio that is now over 90% domestically regulated, particularly with its recent licensing in Brazil. Given China’s stringent crackdown on illegal gambling—where citizens are also prohibited from gambling in legal casinos outside the People’s Republic—analysts reinforce that the potential rewards no longer justify the risks associated with operating in this challenging market.

Regulus noted a “deliberate declining operational focus on China” amid tight regulations and state efforts to combat unauthorized gambling. As a result, China has increasingly become a challenging market for Bet365, making its strategic exit both logical and beneficial for the firm’s future growth and stability.