China internet watchdog to probe Baidu over reports it was used to promote gambling

BEIJING (Reuters) - China's internet regulator said it will investigate Baidu Inc (BIDU.O) after domestic media reported illegal gambling websites used the country's biggest search engine to promote themselves.

In a statement posted on its website late on Monday, the Cyberspace Administration of China (CAC) said it said will conduct a strict investigation and handle any illegal behaviour accordingly. Gambling has been outlawed in China since 1949, though a state lottery does operate.

A Baidu spokeswoman declined to comment on the CAC probe. In a post on an official Baidu microblog account, the company said it was actively assisting Chinese police in an investigation. That statement came after domestic media reported law enforcement officials found Baidu employees profited by helping gambling sites advertise.

Any punishment by the regulator would be the latest in a series of blows to Baidu. Last month, the company cut its revenue forecast for the current quarter, after regulators imposed limits on its lucrative healthcare ads in the wake of a medical scandal.

In its statement, the CAC said Baidu and other search engines must remain firm in not providing a channel to spread gambling and other illegal information.

Online gambling has surged in China recently, driven by events like the Euro 2016 soccer championship. This has prompted multi-million dollar busts by police on Chinese betting rings, while tech giants have tried to crack down on gambling activity on their apps and sites.

(Reporting by Paul Carsten and Beijing Newsroom; Editing by John Ruwitch and Kenneth Maxwell)