China Gambling Regulation

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Gambling RegulationChina, formally known as the People’s Republic of China (PRC), is a country of superlatives. To start with, it is the most populous nation in the world, with more than 1.4 billion inhabitants as of 2021. It is the third largest country on the planet and the biggest in Asia, covering 9.7 million square kilometers. China has also become an economic powerhouse over the past decade and ranks second after the United States, with a nominal gross domestic product of $16.8 trillion in 2021.

The main drivers of the country’s economic growth are agriculture, manufacturing, technology and services. All these factors create a solid foundation for a thriving gambling industry, so perhaps you will find it surprising that nearly all forms of gambling are strictly prohibited in mainland China.

The only exceptions are the government-run Sports Lottery and Welfare Lottery, which offer several types of sports bets and number games. Chinese law does not classify these forms of betting as gambling.

Operating online gaming sites or playing at them is also illegal in China. Despite the general ban, gambling remains widespread among locals. Some participate in the above-mentioned state lotteries, while many others play illegally online, travel overseas, or visit the Macau administrative region, where land-based gambling is largely legal.

Laws on Gambling in China

1The Criminal Law of China

Most forms of gambling became illegal after the Communist Party of China rose to power in 1949. The main piece of legislation governing gambling is the Criminal Law of China, specifically Article 303. It states that persons who organize gambling for profit, operate gambling houses, or make gambling their profession face sentences of up to three years in prison plus fines. Such individuals may also be subject to public surveillance and criminal detention.

2Amendments to the Chinese Criminal Law

An amendment to the Criminal Law provides further clarification of Article 303. The amended article states that individuals who open casinos in mainland China are subject to criminal detention, surveillance, fines, and up to five years in prison. Depending on the severity of the offense, the imprisonment term can reach up to ten years. The amendment also stipulates that organizing Chinese nationals to take part in gambling activities outside the country is a punishable criminal offense.

3What Constitutes Illegal Gambling Organization?

In 2005, the Supreme People’s Court, along with the Supreme People’s Procuratorate, released the Interpretation for Trial of Criminal Cases Concerning Gambling. It states that an individual is guilty of organizing illegal gambling activities if he or she gathers more than three people with the intention to gamble and collects a commission equal to or exceeding ¥5,000.

Another breach of the Interpretation involves gathering more than three people for gambling purposes whose cumulative stakes exceed ¥50,000. Organizing more than ten Chinese nationals to participate in gambling abroad and receiving commissions, rebates, or referral fees from them is also a violation that constitutes “crowd gambling”.

4Online Gambling Is Also Illegal

The 2005 Interpretation provides several additional examples of illegal gambling activities conducted for profit. These include launching an online gambling site, taking bets on behalf of such a site, and acting as its agent. According to Article 3 of the Interpretation, Chinese nationals who establish gaming sites in neighboring countries to attract Chinese citizens as their main clientele are in breach of the law.

Printing or selling state lottery tickets without authorization constitutes an illegal business operation under Article 225 of the Criminal Law. The same applies to organizing underage persons to partake in gambling. Individuals found guilty of these violations will have their illegal gambling equipment and revenue confiscated by the state.

The Interpretation expressly states that playing recreationally for small stakes is not considered illegal gambling. The same holds true for entertainment halls and gaming facilities that collect fees for their services, such as bowling venues and arcade halls. Playing cards or chess in public places for non-profit purposes is also legal.


Legal Forms of Gambling in China and Their Regulators

Despite its uncompromising stance on gambling, China still permits two legal forms of betting. Both operate under the authorization of the Central People’s Government, which is also the primary authority for granting lottery licenses. The entire state lottery sector is overseen by the Ministry of Finance. Chinese legislation prohibits the sale and distribution of foreign lotteries within the country.

The Welfare Lottery
The Sports Lottery

Licensing Requirements and Gambling Taxes in China

Licenses in China are available only for the Sports Lottery and the Welfare Lottery. Both types of permits are issued by the Central People’s Government, also known as the State Council. The Sports Lottery Administration Center and the Welfare Lottery Issuance and Administration Center are mandated to issue lotteries and manage their sales.

The sales agencies for both lotteries must obtain approval from the provincial counterparts of the General Administration of Sport and the Civil Affairs Administration before they can legally offer any games. In turn, the issuance and sales agencies can enter into agreements with entities and persons, authorizing them to distribute lotteries. A distributor must meet several requirements to gain authorization.

Requirements for the Authorization of Landbased Lottery Distributors
Requirements for Online Lottery Distribution
Tax Rates

Gambling Advertising Restrictions in China

Social ResponsibilityArticle 9 (8) of China’s Law on Advertising expressly prohibits the marketing of gambling services and products. Only the two government-run lotteries can market their products, but only if they fulfill the requirements outlined in the Regulations on Lottery Management. Article 18 of the regulations explicitly prohibits lottery sales agencies and distributors from using misleading advertising.

The prohibition extends to the sale of lottery tickets to minors, i.e. Chinese nationals under the legal participation age of 18. The law disallows lottery sales on credit. Since gambling is illegal in almost all of its forms and playing on credit is prohibited, gambling debts in China are not enforceable because there is no legal recourse for collecting them.

Measures against Illegal Gambling in China

1¥1 Trillion on Illegal Gambling Per Year

The Chinese government has waged war against illegal gambling operations for years. In 2010, reports revealed that the country’s nationals spent approximately ¥1 trillion on illegal gambling per year. Illegal gambling remains prevalent to this day.

2Illegal Gambling Is Rampant in China

In December 2020, illegal online gambling reached an all-time high, with more than 11.4 million people playing on unauthorized websites in a single day. The coastal province of Guangdong ranked first with 2.7 million online gamblers, followed by the capital, Beijing, with 640,000 participants. Because online gambling is largely prohibited in mainland China, locals often resort to VPNs (Virtual Private Networks) to mask their location and bypass restrictions.

3Arrests of Chinese Residents

Additionally, many illicit online gambling businesses that target locals operate from neighboring countries such as Malaysia, Vietnam, and the Philippines. They often employ Chinese residents to infiltrate the domestic market illegally. As a result, hundreds of Chinese nationals have been arrested over the years during the multiple crackdowns conducted by China in collaboration with its neighbors.

4The Overseas Gambling Destinations Blacklist

The Chinese Ministry of Culture and Tourism maintains a blacklist of overseas gambling destinations because some locals prefer to travel abroad to gamble instead of playing online. People who frequently visit these blacklisted places risk facing travel restrictions. The authorities have officially warned residents not to travel to other countries for this purpose.

5The Great Firewall of China

To combat remote operators, the country relies on the so-called Great Firewall of China, which is operated by the Ministry of Public Security. The firewall censors undesirable internet content, including remote gaming sites. The authorities use technical measures such as DNS and URL filtering, IP address blocking, and connection resets. In addition, most banks and other financial institutions in mainland China strive to block payments to offshore gaming sites.

Gambling in the Administrative Region of Macau

Anti-Money LaunderingGambling may be illegal in mainland China, but the same does not apply to Macau, a special administrative region (SAR). It has autonomy in some matters, and gambling is one of them. Dubbed the Las Vegas of Asia and the Monte Carlo of the Orient, Macau has a rich gambling history that dates back to its days as a Portuguese colony. It implements the policy known as “one country, two systems”.

This means Macau has a separate legal system, but the Central People’s Government is responsible for foreign affairs and military defense. Various forms of land-based gambling are legal in this administrative region, including lotteries, sports betting, bingo, horse race betting, poker and casino gaming.

The main piece of legislation that governs the casino sector in Macau SAR is the Macau Gaming Law (Law №16/2001). The Gaming Inspection and Coordination Bureau (DICJ) regulates the local gambling industry. The licensing framework is based on concessions between the administrative region’s government and the concessionaires.

Concession contracts are valid for twenty years. At the time of publication, there are three concessionaires and no new licenses will be available until the current ones expire in June 2022. No regulations or licensing procedures for online gambling are in place for the time being.

Gambling in the Administrative Region of Hong Kong

Social ResponsibilityFormerly a British colony, Hong Kong is another special administrative region that allows gambling, but mostly in land-based venues. Several forms of gambling are legal with authorization. The local industry is regulated under the provisions of the Gambling Ordinance of 1977. The main purpose of this legislation is to limit excessive betting while still providing legal options to the population.

The Hong Kong Jockey Club (est. 1884) has a monopoly on lotteries, football and horse race wagering. In fact, horse racing is so popular in the administrative region that it generates the highest horse race betting turnover in the world. Most forms of online gambling are still illegal in Hong Kong SAR.

The only exceptions are sports and horse race wagering, provided by the Jockey Club. Only organizers and operators of illicit online gaming are subject to detention and, subsequently, prosecution. Locals who gamble on offshore websites rarely, if ever, face legal consequences.

Conclusion

ConclusionAs you can see, the Chinese government is very strict when it comes to gambling. The Chinese Communist Party considers such activities harmful to society and goes to great lengths to uproot them. The only legal options for Chinese gamblers are the two government-run lotteries.

Despite the general prohibition, gambling remains prevalent among the population. Mainlanders satisfy their urge by playing on offshore websites or by traveling abroad to gamble at land-based casinos in neighboring countries. Given the scale of illegal gambling activities in the country, the government is unlikely to change its tough stance in the near future.