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June 26, 2015

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Widespread misuse of China’s lottery funds found

CHINA’S top auditor said yesterday it had found widespread misappropriation of 16.9 billion yuan (US$2.72 billion) of funds from its state lottery program in 18 provincial areas between 2012 to 2014.

Funds were appropriated through the buying and building of offices and hotels or embezzled, the National Audit Office said in a report.

The state auditor said irregularities accounted for a quarter of the total of lottery funds received. It said that 17 provinces had flouted the law in engaging in lottery sales through the Internet without approval from the Ministry of Finance.

In another case, 32 lottery shops had used 3.1 billion yuan to construct office buildings, training centers and hotels, its report said.

About 71.9 million yuan was used to buy cars and organize overseas trips in the guise of training and meetings, according to the office.

It said it had suggested a specific rectification campaign for the lottery ticket market and improvements to the regulations governing lottery fund management.

China’s two state-run lotteries — a welfare lottery and its sports equivalent — have been running since the 1980s.

Proceeds from lottery ticket sales cover administrative fees and public welfare projects as well as jackpots.

Between 2012 and 2014, the total welfare and sports lottery sales proceeds in the provincial areas involved in the audit totaled 668.8 billion yuan.

Spurred by rising disposable income, a strong appetite for gambling and more sophisticated games, China’s lottery market has boomed with customers splurging billions of dollars.

China is expected to overtake the United States as the world’s biggest lottery market this year.

The government has so far contained casino gambling to Macau, Reuters reported, in part because of social concerns.

Experts say that officials consider the lottery system more sanitized, with fewer negative effects on the nation’s citizens.

Lottery products are typically sold through authorized stations throughout the country in the form of physical tickets.

These range from dedicated lottery stores to counters in supermarkets, post offices and gas stations.

Unlike the US and Europe, where prizes can climb into the hundreds of millions of dollars, China caps jackpots at 10 million yuan.

Tickets sell for 2 yuan to 200 yuan, with proceeds supporting sports and welfare charities.




 

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