Company Presentation
Disclaimers This document is confidential and is intended only for the use of the person(s) to whom it is presented. It may not be reproduced (in whole or in part) nor may its contents be divulged to any other person. No part of this document may be retained or taken away following the presentation to which this document relates. This document does not constitute an offer to sell or a solicitation of an offer to buy any securities. It is an outline of matters for discussion only. No part of this presentation shall form the basis of or be relied upon in connection with any contract or commitment whatsoever. Specifically, this document does not constitute a “pros pec tus” within the meaning of the U.S. Securities Act of 1933, as amended. 500.com Limited (the “Company”) has filed a registration statement (including a prospectus) (File No. 333 -191844) with the U.S. Securities and Exchange Commission (the “SEC”) for the securities to be offered in the United States, but the registration statement has not yet become effective. This presentation does not contain all relevant information relating to the Company or its securities, particularly with respect to the risks and special considerations involved with an investment in the securities of the Company, and is qualified in its entirety by reference to the detailed information appearing in the prospectus included in the registration statement filed by the Company with the SEC. Any offering of securities to be made in the United States and any decision to purchase securities of the Company in the United States or anywhere else should be made solely on the basis of the information contained in the prospectus included in the registration statement filed by the Company with the SEC. Before making an investment decision, you should read the prospectus in that registration statement and other documents that the Company has filed with the SEC for more complete information about the Company and its securities. You may access these documents for free by visiting EDGAR on the SEC website at: http://www.sec.gov. The issuer has filed a registration statement (including a prospectus) with the SEC for the offering to which this communication relates. Before you invest, you should read the prospectus in that registration statement and other documents the issuer has filed with the SEC for more complete information about the issuer and this offering. You may get these documents for free by visiting EDGAR on the SEC Web site at www.sec.gov. Alternatively, the issuer, any underwriter or any dealer participating in the offering will arrange to send you the prospectus if you request it by calling toll-free 1-800-503-4611. You may not rely upon this document in evaluating the merits of participating in any transaction referred to herein. This document contains selected information and does not purport to be all-inclusive or to contain all of the information that may be relevant to your participation in any such transaction. This document does not constitute and should not be interpreted as either a recommendation or advice, including investment, financial, legal, tax or accounting advice. By attending this presentation, you acknowledge that you will be solely responsible for your own assessment of the merits of participating in any such transaction and that you will conduct your own analysis and be solely responsible for forming your own view of the potential future performance of the Company. Future results are impossible to predict. Certain statements in this presentation, and other statements that the Company may make, may contain forward- looking statements with respect to the Company’s future financial or business performance, or opinions, expectations, beliefs, intentions, estimates or strategies regarding the future, which may not be realized. These statements may be identified by the use of words like “anticipate,” “believe,” “estimate,” “expect,” “intend,” “may,” “plan,” “will,” “should,” “seek,” and simil ar expressions. The Company cautions that forward-looking statements reflect views and assumptions as of the date of this document and are subject to numerous risks and uncertainties, many of which are beyond the Co mpany’s control and subject to change over time. Actual results could differ materially from those anticipated in forward-looking statements and future results could differ materially from historical performance. Given these risks, uncertainties, assumptions and other factors, you are cautioned not to place undue reliance on these forward-looking statements. The Company and its affiliates, advisers, representatives and underwriters have no obligation to and do not undertake to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. The following presentation has been prepared by the Company and has not been independently verified. No representation, warranty or undertaking, expressed or implied, is made as to, and no reliance should be placed on, the accuracy, fairness, completeness, correctness or reasonableness of the information, sources or opinions presented or contained in this document. Neither the Company nor any of its affiliates, advisers, representatives or underwriters, or any of their respective directors, officers, employees or agents, accepts any responsibility or liability whatsoever (in negligence or otherwise) for any damage or loss howsoever arising from any information presented or contained in this document, any omission, inadequacy or inaccuracy in this document, or otherwise arising in connection with this presentation. The information presented or contained in this document is subject to change without notice and its accuracy is not guaranteed. This presentation speaks as of the date hereof. Neither the delivery of this presentation nor any further discussions of the Company or any of its affiliates, shareholders, directors, employees, agents or advisors with any of the recipients of this document shall, under any circumstances, create any implication that the affairs of the Company have not changed since that date. 1
Financials Growth Strategies Peer Comparisons Company Overview Industry Overview Key Competitive Strength
Our business model Highly Efficient Business Model 100% purchase price 100% purchase price Purchase 100% of prize 100% of prize Prize Collection Service fee Service fee Operation 100% online No logistics / No inventory No principal risk No counterparty risk 2
Lottery games offered on our platform Number Based Games Sports Match Games 87% of total purchase amount* 13% of total purchase amount* Soccer High Frequency Basketball Lotto Games Games … … Choose N numbers out of Select N numbers out Bet on the outcome or scores of one M numbers, results of M numbers, results or a combination of sports matches announced every 10 or announced daily or 15 minutes every 3 days * purchase amount in 1H2014 Source: Company 3
Growth Strategies Peer Comparisons Company Overview Industry Overview Key Competitive Strength Financials
China Lottery Market Overview Regulatory framework and value chain Lottery Revenue Sharing Scheme Regulatory Framework Ministry of Finance (Regulator) 100 Ministry of Civil Affairs General Administration of Sports (Issuer) (Issuer) 50 – 69 18 – 35 13 – 15 China Welfare Lottery Issuance China Sports Lottery and Administration Center Administration Center Prize pool for lottery Fund for public Distribution Cost buyers interests Provincial welfare lottery Provincial sports lottery issuance administration centers and administration centers Social Welfare Lottery Sports Lottery Sales Commission Promotion Cost Administration Cost Sports Instant Lotto Instant Lotto Match Source: iResearch 4
Fast growing market China’s Total Lottery Market China's Sports Lottery Market China's Online Sports Lottery Market (US$ bn) (US$ bn) (US$ bn) Penetration 3.3 % 6.9 % 10.1% % 73.6 31.3 3.2 21.9 50.7 1.5 27.2 11.4 0.4 2010 2013 2015E 2010 2013 2015E 2010 2013E 2015E Source: iResearch 5
Huge market potentials Growth trend resilient to economic cycles May 2009, launch of Soccer Sep 2005, soccer lottery Match Lottery, payout ratio Oct 2014, launch of Single payout ratio at 65% Oct 2001, launch of soccer at 69% Match Fixed Odds, payout lottery, payout ratio at 60% Sep 2005, launch of Beijing ratio at 73% Nov 2009, launch of Single Match Lottery Basketball Match Lottery … … … 2001 2005 2009 2014 (US$ millions) 5,646 5,458 4,324 3,517 2,377 1,064 837 869 811 513 176 ... 2001 … 2005 2006 2007 2008 2009 2010 2011 2012 2013 7M2014 Sports betting market size “It is estimated the ratio of legal “The total amount that is illegally “It is estimated the illegal betting gambling and illegal gambling is at wagered in China is estimated to market size to be approximately 1:10 , then China’s illegal gambling be as high as US$93 billion in RMB600 billion every year…” amount is at hundreds of billions 2012” of dollars …” 2013, Global Betting and 2014, Xinhua news 2012, Sina News Gaming Consultants 6
Peer Comparisons Company Overview Industry Overview Key Competitive Strength Financials Growth Strategies
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