DouYu CEO Chen Shaojie Arrested in China on Gambling Charge

Posted on: November 22, 2023, 09:53h. 

Last updated on: November 22, 2023, 12:09h.

Devin O'Connor @CasinoorgDevinO Read More
Expertise: Asia Pacific Gaming, Commercial Gaming, Legislation, Politics.

DouYu Chairman and CEO Chen Shaojie, 39, was arrested earlier this month in China for allegedly allowing gambling on his livestreaming service.

DouYu Chen Shaojie illegal gambling
DouYu CEO Chen Shaojie in a 2019 file photograph in New York. Chen was arrested earlier this month in China on reported charges of allowing illegal gambling on his livestreaming service. (Image: Reuters)

DouYu is the equivalent of Twitch in China, though it has far more active monthly users than its U.S. counterpart. DouYu was founded by Chen in 2016.

Tencent Holdings, the Chinese multinational tech and entertainment conglomerate that is the world’s largest video gaming publisher, holds a 37% stake in the livestreaming service. DouYu confirmed Tuesday that Chen had been arrested “on or about” November 16.

The Company has not received any official notice of the investigation against Mr. Chen or the reasons for Mr. Chen’s apparent arrest. The Company cannot comment on the nature or expected time line of subsequent legal proceedings, if any, that may follow,” the DouYu statement explained.

“Mr. Chen’s ongoing detention and any subsequent related legal proceedings and enforcement actions against the parties involved may have a material adverse impact on the Company’s reputation, business, and results of operations. The Company maintains normal operation of its business and remains committed to upholding regulatory compliance on its platform. The Board and management will supervise the operations of the Company and work on contingency plans in response to Mr. Chen’s arrest and related investigations,” the statement concluded.

Casino.org?reported on November 7 that Chen had been detained on suspected pornography and gambling charges.

Gambling Charges

Reports have surfaced that Chen was arrested on charges of facilitating illegal gambling activities on the DouYu platform. Reuters reports that the DouYu founder and chief executive was arrested near Chengdu, the capital city of the Sichuan Province.

Chinese media outlets reported before the company statement this week that Chen had been missing for at least three weeks and had not been seen in public since August. The Reuters account suggests Chen is being accused of running an online gaming enterprise, something that’s illegal in China.

Most forms of gambling aside from the sports lottery are prohibited on the mainland, and in Taiwan and Hong Kong. Macau is the lone exception in China, where commercial casinos with slot machines and table games can operate.

Company Notice

It’s suspected that prosecutors in China believe the DouYu platform is being used to facilitate betting between viewers watching the livestreaming of video games. In its annual report filed this year with the U.S. Securities and Exchange Commission (DouYu is traded on the Nasdaq), DouYu said it was taking steps to prevent illicit activity on its platform.

If our platform is deemed to be engaged in or facilitate certain illegal or inappropriate activities, we may need to remove such activities permanently, or modify rules for such activities that could make them less attractive, or even be subject to fines, penalties, or criminal or civil liabilities, which may have an adverse impact on our business, results of operation and reputation,” the regulatory filing read.

In 2020, Tencent, which also controls DouYu’s primary rival, Huya, proposed a $10 billion merger of the Chinese streaming giants. The transaction was blocked on antitrust grounds by China’s State Administration of Market Regulation.