Chinese Streaming Platform Boss Arrested on Gambling Charges

Chen Shaojie, CEO and Chairman of Chinese gaming live-streaming platform DouYu, has been arrested on charges of illegal gambling.

DouYu, a Chinese clone of Amazon-owned Twitch, is backed by Tencent Holdings, the world's largest video gaming publisher, which holds a 37% stake in the company which has more active monthly users than its American counterpart.

Chen was arrested around November 16 on suspicion of allowing illegal gambling on the platform. It is suspected that Chinese prosecutors believe DouYu is being used to facilitate betting between viewers watching live-streamed video games. 

In its annual report filed with the US Securities and Exchange Commission, DouYu stated that it was taking steps to prevent illicit activity on its platform.

The Chengdu police confirmed that a 39-year-old man named Chen was arrested on suspicion of operating a casino. Prior to the arrest, Chen had been missing for at least three weeks and had been away from public view since August.

In China, suspects in criminal cases are often detained for weeks or months before their formal arrest, and authorities feel no obligation to report detentions. Formal arrests almost always lead to a later conviction.

DouYu has previously faced scrutiny for allegedly hosting online gambling, which is strictly illegal in Mainland China.

In May 2023, China's cyberspace watchdog launched an on-site inspection of DouYu, stationing a group at the company for a month to supervise the platform as it addressed problems, including pornographic content. The Chinese authorities have also accused DouYu of hosting gambling content in the past.

It is suspected that the charges against Chen could be related to a practice whereby platform users who buy virtual props or gifts on the platform open an account to participate in lottery schemes and gain rewards from streamers in private.

Last December, a livestream group called "Shanshanjiu Outdoor" with more than 3.13 million followers was convicted of gambling on the DouYu platform.

According to corporate information on China's Tianyancha database, DouYu has invested in companies that backed the two streamer groups, which could explain Chen's arrest for suspected involvement in gambling.

DouYu's share price tumbled about 10% in the US pre-market and sank nearly 8.5% soon after trading opened on the day of the announcement.

The company has stated that it "cannot comment on the nature or expected timeline of subsequent legal proceedings, if any, that may follow".