Latest statistics from China's Ministry of Finance show that the country's lottery market, including the China Welfare Lottery and China Sports Lottery, grossed a total revenue of 426.6 billion yuan, equivalent to the entire financial revenue of the city of Beijing.
However, many observers are concerned about where the lottery money is going and how it is being managed.
Around 55 percent of lottery sales go directly into the main prize fund, while a large part of the remaining amount is transferred to the Lottery Public Welfare Fund.
"The original intention of setting up a welfare lottery in China in 1987 was to make up for the lack of funds allocated to welfare projects by the Treasury. Currently, about 28 percent of lottery sales are included in lottery public welfare funds," said Feng Yaping, Director of the China Welfare Lottery Distribution and Management Center.
According to Feng, by the end of 2017, China had issued 1.795 trillion yuan in welfare lottery tickets which raised over 537 billion yuan in public welfare funds.
Zhang Chi, director of the Sport Lottery Management Center of China's State General Administration of Sports, said that the lottery is, to some extent, aimed at accumulating extra money for public welfare.
The Sports Lottery has brought in 1.4 trillion yuan in revenue since 1994, raising a total of around 382 billion yuan for public welfare funds.
Spreading the wealth
Two yuan for a lottery ticket may seem cheap, but it is also an important channel for raising special public funds for social welfare projects in China. In 2017, out of the total revenue of 426.6 billion yuan, over 100 billion yuan was allocated to lottery public welfare funds.
These funds have become an important means of financial support for the development of social welfare undertakings in China, according to sources from the Ministry of Finance.
With the steady growth of lottery public welfare funds over the past 30 years, the distribution policy has also changed from the initial "departmental distribution" model to the current "proportional distribution".
According to current rules, central and local governments are allocated funds at a ratio of 50:50. The central government then allocates 60, 30, 5 percent each respectively to social security funds, special public welfare funds, the Ministry of Civil Affairs and State Sports General Administration. Local governments then decide on distribution with civil administration and sports departments.
With 60 percent of lottery public welfare funds allocated to social security funds by the central government, 30 percent of the funds go directly to pensions. In other words, for every two yuan spent on a lottery ticket, about 20 cents goes to the pension fund.
At the same time, the China Sports Lottery serves as a lifeline for sports and a boost for social welfare, speeding up the development of a healthy and prosperous sport culture in China. It also helps promote major sport events such as the Olympic Games, Asian Games and National Games.
"Nowadays, funds for national sporting causes almost all come from sports lottery public welfare funds," Zhang said, adding that most of the funds are used for the nationwide construction of fitness centers, community multi-purpose playgrounds, and fitness trails.
Keeping it clean
Ensuring that lottery funds make it back to the people who purchased tickets and that loopholes in the operation of lottery public welfare are plugged have become an issue of concern.
The management and usage of lottery funds have improved significantly in recent years, thanks to the continuous efforts made in regulation and supervision.
In June 2015, China's National Audit Office announced the results of an inspection of lottery administration centers in 18 Chinese provinces that found corrupt officials had embezzled or misused nearly 17 billion yuan in lottery proceeds over a three-year period.
Zeng Fanrong, founder of the lottery industry data analysis company Caitong Consulting, said that keeping the process transparent is key to safeguarding lottery property.
To regulate the management and use of public welfare funds, the Ministry of Civil Affairs announced in June 2017 that allocation of welfare lottery funds should be made public by the end of June each year.