Video game streamer Douyu confirms CEO’s arrest in China after weeks of speculation about gambling content

Police in Chengdu, the capital of southwest China’s Sichuan province, said on Wednesday they had arrested a 39-year-old man surnamed Chen on suspicion of opening a casino, a day after US-listed video game live-streaming platform Douyu International Holdings confirmed the arrest of its founder and CEO Chen Shaojie.

Local authorities said investigation of the case surrounding the arrested man, whose first name contains the word “jie”, was ongoing. No further details were given.

Douyu, backed by Tencent Holdings, said in a statement on its website on Tuesday that CEO Chen was arrested around last Thursday in Chengdu.

While Douyu also said operations remain normal, it warned investors that the ongoing detention and subsequent legal process could have a “material adverse impact” on the company’s reputation and operations in the future.

The board and management are working on contingency plans in response to Chen’s arrest and related investigations, it added.

Confirmation of the arrest comes three weeks after Chinese media reported that Chen had been held “incommunicado” by authorities since October, fanning widespread speculation that it was related to several gambling-related live-streaming sessions on the platform.

Chinese media The Paper reported on Tuesday that Chen’s arrest was likely to be related to gambling activities, which are illegal in the mainland. Citing anonymous sources, The Paper reported that Chen’s gambling experience went back more than a decade.

Launched in 2014, Douyu has become one of the top three video game live-streaming platforms in China. Both Douyu and its main rival Huya count Tencent as a major stakeholder. At the height of Beijing’s regulatory crackdown on the country’s internet sector in mid-2021, China’s antitrust watchdog blocked Tencent’s attempted US$5.3 billion merger of the two platforms.

Kuaishou Technology, known for TikTok-like short videos, is the other major player in this market.

Chen was born in 1984 in eastern Shandong province. One of his early ventures was a video gaming platform called Zhangmenren, which was acquired by Shanghai-based Shenda Games in 2009. From 2010 to 2012, he served as the chief executive of Acfun, a video-sharing platform similar to Bilibili targeting Millennials. During that stint, Chen set up a live-streaming business within the platform, which later spun off to become Douyu.

The executive’s last public appearance was in August for Douyu’s second-quarter earnings call, when he said the company had “evaluated the awareness of content management and regulatory guidelines” and “optimised the healthy system of our game-centric community”.

Douyu raised US$775 million from its initial public offering in New York in July 2019. Shares of the company tumbled 5.9 per cent and closed at US$0.91 on November 21.

Douyu has been operating under the shadow of the Cyberspace Administration of China, the country’s powerful internet regulator, since a rare on-site inspection earlier this year.

In May, the agency said it deployed a working group from its local arm in central Hubei province, based in Douyu’s home city of Wuhan, to address “serious” problems related to the platform, including pornographic and vulgar content. The working group was stationed at the company for a month to supervise its “rectification” process.

The inspection was the latest case of Beijing’s tightening regulatory control over the video game industry and online content in recent years. In April last year, broadcast regulator the National Radio and Television Administration banned online platforms from live-streaming video games without approval.

Douyu said in its latest statement that the company “remains committed to upholding regulatory compliance on its platform”.