Lottery operator’s woes far from over :

Lottery operator’s woes far from over :

The worse is yet to come for the beleaguered Chinese online sports lottery operator Ltd. – if the rise of short sellers is any indication.

Bloomberg tracked a surge of bearish bets on Ltd days before the lottery operator announces its second-quarter earnings, an omen that things are getting worse in the company more than a year and a half since the Chinese government stopped its operations.

Data from Markit and Bloomberg showed that’s U.S-traded shares hit a record of 4.2 million sold short last week. Fueling the short-selling activities in the company is the speculation that the Chinese regulators left out from the list of lottery services allowed to resume operations.

In an e-mail to the business news agency, analyst Henry Guo of the New York-based M Science LLC said the Chinese government is mulling on issuing license to selective players in China.

“The short-interest rally reflects the probability that will miss the boat,” Guo pointed out. was one of the two entities the Ministry of Finance allowed to provide online lottery sales services on behalf of the China Sports Lottery Administration Center in 2012.

But in March 2015, the Chinese government ordered a ban on the online lottery sales as it probes the state-run industry in connection with its program to stamp out corruption in the government. Among the affected companies were, Taobao, an online lottery platform operated by Alibaba Group Holding Ltd, and Sina Corp.

Since the imposition of a lottery ban, continues to bleed cash. In March, the lottery operator sold a 63 percent stake in payment services provider, four months after buying it for about $36 million.

Brendan Ahern, the chief investment officer at KraneShares, which owns a stake in the company, said the lifting of the lottery sales ban will probably push the stock higher.

“The government’s decision to lift the ban on lottery sales — or not– will be a turning point for the company,” Ahern told the business news agency. “A spike in short interest is traders saying, what if doesn’t receive a right to conduct lottery sales, what will happen to the stock.”

Source: Lottery operator’s woes far from over :