Chen Shaojie, CEO of DouYu, Arrested for Suspected Gambling Offenses

On November 7, 2023, it was reported that Chen Shaojie, the Chairman and CEO of DouYu, had been arrested in China on charges of allowing illegal gambling on his livestreaming service. DouYu is the Chinese equivalent of Twitch and was founded by Chen in 2016, with a 37% stake held by Tencent Holdings, the world’s largest video gaming publisher.

The company confirmed Chen’s arrest but stated that they had not received any official notice of the investigation against him, nor the reason for his arrest. However, they warned that Chen’s detention and any subsequent legal proceedings could have a material adverse impact on the company’s reputation, business, and results of operations. They also reassured that they would uphold regulatory compliance on their platform and implement contingency plans in response to Chen’s arrest and related investigations.

Reports indicated that Chen was arrested on charges of facilitating illegal gambling activities on the DouYu platform. Chinese media outlets had previously reported that Chen had been missing for at least three weeks and had not been seen in public since August. It is suspected that prosecutors in China believe the platform was being used to facilitate betting between viewers watching the livestreaming of video games.

If it is found that the platform had engaged in or facilitated illegal activities, DouYu may face fines, penalties, or criminal liabilities, which could have an adverse impact on its business, results of operation, and reputation. Despite this, the company remains committed to preventing illicit activity on its platform, as stated in its annual report filed this year with the U.S. Securities and Exchange Commission.

In 2020, Tencent proposed a $10 billion merger of DouYu and Huya, another Chinese streaming platform it controls. However, the transaction was blocked on antitrust grounds by China‚Äôs State Administration of Market Regulation. The situation with Chen’s arrest is ongoing, and its implications for DouYu’s future are uncertain.