China, 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, having over 1.4 billion inhabitants as of 2021. It is the third biggest country on the planet and the largest one in Asia, with a total area of 9.7 million sq. 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 the agriculture, manufacturing, technology, and service sectors. All these factors are 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 that offer several types of sports bets and number games. Chinese law does not legally define 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 landbased 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 that applies to gambling is the Criminal Law of China and more specifically, Article 303. It states that persons who organize gambling for profit, run gambling houses, or make gambling their profession face sentences of up to three years in prison plus fines. Such individuals might also become subject to public surveillance and criminal detention.
2Amendments to the Chinese Criminal Law
An amendment of the Criminal Law sheds further clarification on Article 303. The amended version of the article states that individuals who open casinos in mainland China are liable for criminal detention, surveillance, fines, and up to five years in prison. Depending on the severity of the transgression, the term of the imprisonment might reach up to ten years. The amendment stipulates that organizing Chinese nationals to partake in gambling activities outside the country is also 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 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 is 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 a commission, rebates, or referral fees from them is also a violation that constitutes “crowd gambling”.
4Online Gambling Is Also Illegal
The 2005 Interpretation provides several more examples of illegal gambling activities for profit. These include launching an online gambling site, taking bets on behalf of one such site, and acting as its agent. According to Article 3 of the Interpretation, Chinese nationals who establish gaming sites in neighboring countries to attract China citizens as their main clientele are in breach of the law.
Printing or selling state lottery tickets without authorization constitutes illegal business operation under Article 225 of the Criminal Law. The same goes for organizing underage persons to partake in gambling. Individuals 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 goes for entertainment halls and gaming facilities that collect fees for their services, for example, bowling venues and arcade halls. Playing cards or chess in public places for non-profit purposes is legal as well.
Legal Forms of Gambling in China and Their Regulators
Despite its uncompromising stance on gambling, China still has two legal forms of betting. Both operate with the authorization of the Central People’s Government, which is also the primary authority to grant lottery licenses. The entire state lottery sector is subject to the oversight of the Ministry of Finance. Chinese legislation prohibits the sale and distribution of foreign lotteries within the country.
Licensing Requirements and Gambling Taxes in China
Licenses in China are only available 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 have the mandate to issue lotteries and manage their sales.
Respectively, the sales agencies for the two types of lottery must gain approval from the provincial counterparts of the General Administration of Sport and the Civil Affairs Administration before they can legally offer any lotteries. In turn, the issuance and sales agencies can enter into agreements with entities and persons, authorizing them to distribute lotteries. A distributor must fulfill several requirements to gain authorization.
Gambling Advertising Restrictions in China
Article 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 on condition they fulfill the requirements outlined in the Regulations on Lottery Management. Article 18 of the regulations explicitly prohibits lottery sales agencies and distributors from misleadingly advertising themselves. .
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 as there is no legal recourse of collecting them.
Measures against Illegal Gambling in China
1¥1 Trillion on Illegal Gambling Per Year
The Chinese government has been waging war against illegal gambling operations for years. In 2010, reports emerged that the country’s nationals spend approximately ¥1 trillion on illegal gambling per year. Illegal gambling continues to be prevalent to this day.
2Illegal Gambling Is Rampant in China
In December 2020, illegal online gambling reached its all-time high ever, with over 11.4 million people playing on unauthorized websites within a single day. The coastal province of Guangdong ranked first in this respect with 2.7 million online gamblers, followed by the capital Beijing with 640,000 participants. Since online gambling is largely prohibited in mainland China, locals commonly resort to VPNs (Virtual Private Networks) to mask their location and bypass the restrictions.
3Arrests of Chinese Residents
Additionally, many illicit online gambling businesses that target locals operate from neighboring countries like Malaysia, Vietnam, and the Philippines. They tend to employ Chinese residents to illegally penetrate the local market. As a result, hundreds of China nationals have been arrested over the years during the multiple crackdowns the country has conducted 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 for this purpose rather than play online. People who frequently visit the blacklisted places risk facing travel restrictions. The authorities have officially warned locals not to travel to other countries for such purposes.
5The Great Firewall of China
As for battling remote operators, the country relies on the so-called Great Firewall of China operated by the Ministry of Public Security. The firewall censors undesirable internet content, including remote gaming sites. The authorities resort to technical methods like DNS and URL filtering, IP address blocking, and connection resets. Additionally, most banks and similar financial institutions in mainland China strive to block payments to offshore gaming sites.
Gambling in the Administrative Region of Macau
Gambling 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 the days when it was a Portuguese colony. It implements a policy known as “one country, two cities”.
This means Macau has a separate legal system but the Central People’s Government has the responsibility of enforcing foreign affairs and military defense laws. Various forms of landbased 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 have a validity of twenty years. At the time of publication, there are three concessionaires and no licenses will be available until the previous 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
Formerly a British colony, Hong Kong is another special administrative region that has legal gambling but mostly in landbased venues. Several gambling forms 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 races are 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 the 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.
As 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 extreme lengths to uproot them. The only legal options for Chinese gamblers are restricted to the two government-run lotteries.
Despite the general prohibition, gambling remains prevalent among the population. Mainlanders get their fix by playing at offshore websites or by traveling abroad to gamble at landbased casinos in neighboring countries. Given the scope of illegal gambling activities in the country, the government is unlikely to change its tough stance in the near future.