China reveals misuse of US$2.7 billion in lottery funds

A lottery winner dressed as the inflatable robot Baymax from the Disney animated movie Big Hero 6, poses with a cheque in Chengdu, Sichuan province, on April 16, 2015.
A lottery winner dressed as the inflatable robot Baymax from the Disney animated movie Big Hero 6, poses with a cheque in Chengdu, Sichuan province, on April 16, 2015.PHOTO: REUTERS

BEIJING (REUTERS) - China has uncovered widespread misappropriation of 16.9 billion yuan (S$3.46 billion) of funds from its state lottery programme, underscoring the extent of official corruption as the country tries to root out graft.

Funds were misappropriated through the buying and building of office buildings and hotels or embezzled, the National Audit Office said in a report on its website.

The state auditor said the irregularities accounted for a quarter of the total of lottery funds received in its 2012-2014 investigation that spanned 18 provinces.

It said 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 centres and hotels, the report said.

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, in part because of social concerns. Experts say officials consider the lottery system more sanitised, with fewer negative effects on citizens.

The review comes as President Xi Jinping's government has waged a fight against corruption, warning that the problem is so bad it could affect the Communist Party's grip on power.

Lottery products are typically sold through authorised 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 United States 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.