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What: A day after falling 15%, shares of 500.com Ltd (NYSE:WBAI) were recovering today, gaining as much as 10%, and finishing up 7% after responding to a report questioning the legality of its service.  

So what: On Wednesday, a Chinese newspaper reported that the China Sports Lottery Administration Center had not authorized any sports lottery websites, the business that 500.com deals in. Today, the company responded by saying it "fervently denies the allegations," and "reiterated that it has obtained all relevant approvals to legitimately operate an online sports lottery service in China," which includes approval from the Ministry of Finance, the ultimate overseer of the lottery industry. Also, 500.com provided links to documentation. 

Now what: Though shares moved higher on today's news, they're still down 9% from their close two days ago, prior to the accusations coming out that may indicate some skepticism remains about 500.com's legal authorization. Following 500.com's response, Deutsche Bank upgraded the lottery service from sell to hold, and the company announced quarterly earnings yesterday, beating expectations. The information cited by 500.com seems convincing, but this issue could linger. To keep an eye on any further reports, you can add 500.com to your Watchlist here.

Jeremy Bowman has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.