China’s Lottery Boom Sparks Social Fears

Lottery Ticket
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Cui Shengjun has charted the past 100 lottery draws in China. Lines connecting all the numbers snake back and forth on a whiteboard on his wall.

"There definitely is a pattern. You just have to study it very carefully and I personally am something of an expert now," says the grey-haired manager of a Beijing convenience store.

Mr Cui's expertise apparently has its limits. He boasts of not having lost money, though concedes that he has also never won big.

Like millions of others across China, Mr Cui is hooked on the lottery. He plays instant games at video terminals, picks his daily "powerball" numbers and places weekly bets on football matches.

His story is little different from those of chronic gamblers the world over, apart from one major exception: gambling is illegal in China.

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Yet Mr Cui is no criminal: he plays the state-run lottery. In the late 1980s, looking to boost revenue, the government made an exception to a ban on all gambling that had been strictly enforced since Mao's day and created a lottery to support the development of a welfare system.

More than two decades on, this anomaly has grown into the biggest lottery boom the world has ever seen. Annual ticket sales are nearly 15,000-times higher than at their humble beginnings. China is on track to be the world's largest lottery market within this decade.

Ticket sales were up nearly 20 percent last year and the industry is worth $40 billion, ranking only behind the US, which pulls in more than $50 billion.

"As living conditions have improved, Chinese people have wanted to have more fun, to have a wider range of experiences. A stronger desire to gamble is part of that," says Cheng Haiping, a professor with the China lottery research center at Beijing Normal University.

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Despite their traditional view of gambling as a social curse, China's Communist rulers now stand accused of doing too little to combat the ills that have come hand in hand with the runaway success of the lottery system.

We don't know where the money goes and we don't know how much goes to people playing the lottery.

China has two state-run lotteries: the welfare lottery and its sports equivalent. Ticket sales account for less than 1 per cent of overall government revenue, but the bulk of the proceeds are earmarked for the woefully underfunded social security system, providing an important supplement, at least in theory.

Critics are not convinced the funds are well used. Public disclosures about how the money is spent are limited. The finance authorities of just nine of the country's 34 province-level administrations published reports explaining their use of 2011 lottery revenues, according to the central government.

Lang Xianping, a popular economist, appealed to television viewers last year to stop buying lottery tickets. "We don't know where the money goes and we don't know how much goes to people playing the lottery," he said in an interview on Guangdong television that was circulated widely online. "We should hit out at corruption in the lottery."

Beijing is also grappling with a paradox that affects other countries with large lotteries. While the proceeds are meant to help the less fortunate, the main demand for tickets comes from some of the poorest members of society, and this problem is exacerbated by China's cavernous wealth gap.

"With property prices so high, lots of people, especially low and middle income earners, feel they will never be able to afford a home relying on their own hard work alone, so they buy lottery tickets hoping to change their fate," Mr Cheng says.

The belief that a single lottery ticket can bring about instant transformation has been encouraged by increasingly juicy jackpots. The biggest lottery story of 2012 was the Rmb570 millon ($92 million) prize won by a Beijing man, the most ever in a Chinese lottery.

Beijing Normal University conducted a study last year that revealed that China has about 7 million "problem lottery buyers" out of the 200 million people who regularly buy tickets.

Chinese media have started to report more often about the pitfalls of a gambling addiction. In one case last summer, a man in Jinan, capital of the eastern province of Shandong, was arrested for fraud after he sold his apartment and car and withdrew Rmb240,000 on overdraft from eight banks to buy lottery tickets in the hopes of striking it rich.

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A proliferation of internet gambling sites and mobile phone apps means that China's lottery landscape is growing even busier, targeting new and often younger gamblers. Bricks-and-mortar ticket vendors may eventually be threatened by these technologies.

For the time being, though, they say their customer base is only getting bigger.

On a chilly winter's day, an old man and two young women filter into a lottery outlet in east Beijing. It is the low season, but business is brisk.

"In summer this place gets crowded with buyers staring at the screens," says Zhao Nan as he pauses between selling tickets. "We are recruiting another person for our sales staff."