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A young man wearing a panda mask walks onto a stage and collects a check for 565 million yuan ($89.70 million). It sounds like the beginning of some improbable Hollywood situation comedy, but actually the man from east China’s Zhejiang Province was collecting his lottery winnings, the largest jackpot in the country’s history, on August 29, 2011. He withheld his name and wore a mask to protect his identity from those who might be tempted to take advantage of his sudden windfall.
Although he refused to disclose his name, the lucky winner did donate 20 million yuan($3.18 million) to charity projects for the elderly and children. An income tax of 109 million yuan ($17.30 million) was also levied on his winnings.
Last year, 1,652 different lotteries in China offered jackpot prizes of more than 5 million yuan ($794,092) each. Four lotteries offered prizes in excess of 100 million yuan($15.88 million).
While games of chance in China were banned in 1949, the lottery industry has recorded a robust rebound since it was reintroduced in 1987, making China the fastestgrowing lottery market in the world. Over a quarter of century, China’s annual lottery revenue has risen from almost nothing to more than 200 billion yuan ($35.16 billion). According to statistics from the World Lottery Association, global lottery sales worldwide recorded a year-on-year growth of 6.3 percent in 2010, while the growth rate in China was a staggering 25.5 percent.
In 2011, China’s lottery sales hit a record 221.5 billion yuan ($35.16 billion), up 33.2 percent year on year, only four years after sales topped the 100-billion-yuan ($15.88-billion) benchmark in 2007.
Although China’s lottery revenue was still smaller than that of some developed countries, its overall lottery market was highly developed. China’s Lottery Development Index, the ratio of a country’s annual lottery revenue against its GDP, has stood at around 0.4 percent since 2005, on par with that of the United States.
Tightened regulation There are two categories of state-operated lotteries in China—welfare lotteries and sports lotteries. The money raised from draws has become an important source of funding for government social welfare and sports programs.
The revenue structure of most lotteries in China is that 50 percent of takings are paid out as prizes, 35 percent go to a social welfare or sports fund and no more than 15 percent goes to lottery operators. In 2011 alone, lotteries raised a total of 63.4 billion yuan ($10.07 billion) for public welfare and sports funds.
In order to stamp out fraud in the fast-growing lottery industry and ensure its credibility, China introduced its first administrative regulations governing lotteries, the Regulations on Administration of Lotteries, on July 1, 2009. The regulations clarify issues about the administration of lotteries, the issuing of licenses to run lotteries, sales, draws and prize collection, lottery fund management as well as the penalties with respect to breach of regulations.
In October 2010, the Ministry of Finance issued two regulations on the administration of online and telephone lottery sales.
According to the Ministry of Finance, the latest Detailed Rules of Regulations on the Administration of Lotteries, which took effect on March 1, are intended to further regulate China’s lottery market, safeguard the interests
of players and enhance lotteries’ credibility. For example, according to the new rules, the original records of lottery sales should be kept for at least 60 months after sales.
The rules also barred any person working for lottery issuers, sellers and retailers from compelling lottery winners to donate all or part of their prize money.
While a better-regulated market will only increase the public’s trust and confidence in lotteries, prompting an even sharper increase of lottery sales, many experts have begun to ques- tion whether the boom in lottery tickets sales comes at the cost of the overall health of society.
In a paper published in 2010, Feng Baiming, a professor at Henan University of Economics and Law in Zhengzhou, central China’s Henan Province, and a long-time lottery researcher, suggested that the size of China’s lottery market should be regulated and kept below 250 billion yuan ($39.71 billion) by 2015 as a large industry might cause social problems.
Lottery addicts
At the peak of his lottery addiction, Ren Xiaofeng, a former employee of the Agricultural Bank of China’s branch in Handan, north China’s Hebei Province, spent 14.1 million yuan ($2.24 million) on lottery tickets on a single day.
Over the course of a month in 2007, Ren and his colleague, Ma Xiangjing, the only two employees with the keys to the bank’s vault, stole a total of 45.35 million yuan ($7.20 million) from the vault and spent the entire amount on lottery tickets. Ren, mastermind of the bank theft, said in court later that the only two “big” prizes they won were 85,000 yuan ($13,500) and 18,000 yuan ($2,859), and they spent even these winnings on more lottery tickets.
Realizing that they would not win enough prize money to climb out of their hole of bank theft before being caught, Ren and Ma fled. Even as a fugitive, Ren had to fight the urge to buy lottery tickets for fear of being recognized and apprehended.
While Ren may be an extreme case of lottery addiction, lottery industry observers estimate that China has more than 4 million problem lottery players, or those whose addiction to gambling has begun to have an effect on their well-being and the well-being of their families.
“Problem gaming undermines social stability. For example, in some cases, lottery players embezzle public funds to buy tickets, which brings financial losses to the state. More commonly people gamble with their own savings that disrupts their lives,” said Wang Xuehua, Executive Director of China Center for Lottery Studies, Peking University.
What is worse, demographically the lowincome group, who can least afford to spend money, tends to be the worst hit by the spread of gaming addiction. According to a study conducted by Feng in 2008, China’s least developed provinces and autonomous regions in terms of per-capita GDP, such as Tibet Autonomous Region and Yunnan Province, had the highest Lottery Developed Index figures in China.
Although the new rules on lottery administration stipulate that lottery issuers and sellers must organize professional training for ticket sellers, it does not specify the aim or content of the trainings. While it is hoped that lottery sellers will be able to recognize problem lottery players and cut them off at a certain point, the way a bartender would cut off a problem drinker, whether any of them will actually do so remains an open question.
A reporter with the Legal Daily newspaper visited dozens of lottery stores in east China’s Jiangsu Province last December. Not one ticket seller advised the reporter on responsible gaming while many vendors tried to entice him by describing big prizes and lucky winners.
In 2011, the revenue of sports lotteries in Jiangsu exceeded 10 billion yuan ($1.59 billion), making Jiangsu the first province in China to hit this benchmark. According to lottery industry observers, this market boom has a lot to do with the introduction of a new type of quick draw lottery in Jiangsu last July, where players pick five numbers from 1 to 11. There are only 10 minutes between draws and no cap on how much one can bet. An anonymous former lottery addict told the Legal Daily that compared with regular lotteries, quick draw lotteries are even more addictive as the feedback is quicker.
“Some lotteries are too addictive while the advertising for lotteries focuses only on getting rich fast,” Wang said.
The Ministry of Finance issued a notice on February 1, saying that lottery issuers and sellers should shift the focus of their advertising away from big prizes and toward the charitable projects funded by lotteries.
In 2009, Wang’s center opened one of China first toll-free helplines for lottery addicts. She said that helplines alone are far from sufficient to solve the problem of lottery addiction, while the solution to the problem lies in promoting responsible gaming, which requires the efforts of the government, lottery issuers and the players themselves.
“Lottery players’ money is why this industry exists, but China still lacks a support system for addicts,” Wang said. “Part of the charitable funds raised by the lottery industry should be used to mitigate the industry’s own negative effects.”
Although he refused to disclose his name, the lucky winner did donate 20 million yuan($3.18 million) to charity projects for the elderly and children. An income tax of 109 million yuan ($17.30 million) was also levied on his winnings.
Last year, 1,652 different lotteries in China offered jackpot prizes of more than 5 million yuan ($794,092) each. Four lotteries offered prizes in excess of 100 million yuan($15.88 million).
While games of chance in China were banned in 1949, the lottery industry has recorded a robust rebound since it was reintroduced in 1987, making China the fastestgrowing lottery market in the world. Over a quarter of century, China’s annual lottery revenue has risen from almost nothing to more than 200 billion yuan ($35.16 billion). According to statistics from the World Lottery Association, global lottery sales worldwide recorded a year-on-year growth of 6.3 percent in 2010, while the growth rate in China was a staggering 25.5 percent.
In 2011, China’s lottery sales hit a record 221.5 billion yuan ($35.16 billion), up 33.2 percent year on year, only four years after sales topped the 100-billion-yuan ($15.88-billion) benchmark in 2007.
Although China’s lottery revenue was still smaller than that of some developed countries, its overall lottery market was highly developed. China’s Lottery Development Index, the ratio of a country’s annual lottery revenue against its GDP, has stood at around 0.4 percent since 2005, on par with that of the United States.
Tightened regulation There are two categories of state-operated lotteries in China—welfare lotteries and sports lotteries. The money raised from draws has become an important source of funding for government social welfare and sports programs.
The revenue structure of most lotteries in China is that 50 percent of takings are paid out as prizes, 35 percent go to a social welfare or sports fund and no more than 15 percent goes to lottery operators. In 2011 alone, lotteries raised a total of 63.4 billion yuan ($10.07 billion) for public welfare and sports funds.
In order to stamp out fraud in the fast-growing lottery industry and ensure its credibility, China introduced its first administrative regulations governing lotteries, the Regulations on Administration of Lotteries, on July 1, 2009. The regulations clarify issues about the administration of lotteries, the issuing of licenses to run lotteries, sales, draws and prize collection, lottery fund management as well as the penalties with respect to breach of regulations.
In October 2010, the Ministry of Finance issued two regulations on the administration of online and telephone lottery sales.
According to the Ministry of Finance, the latest Detailed Rules of Regulations on the Administration of Lotteries, which took effect on March 1, are intended to further regulate China’s lottery market, safeguard the interests
of players and enhance lotteries’ credibility. For example, according to the new rules, the original records of lottery sales should be kept for at least 60 months after sales.
The rules also barred any person working for lottery issuers, sellers and retailers from compelling lottery winners to donate all or part of their prize money.
While a better-regulated market will only increase the public’s trust and confidence in lotteries, prompting an even sharper increase of lottery sales, many experts have begun to ques- tion whether the boom in lottery tickets sales comes at the cost of the overall health of society.
In a paper published in 2010, Feng Baiming, a professor at Henan University of Economics and Law in Zhengzhou, central China’s Henan Province, and a long-time lottery researcher, suggested that the size of China’s lottery market should be regulated and kept below 250 billion yuan ($39.71 billion) by 2015 as a large industry might cause social problems.
Lottery addicts
At the peak of his lottery addiction, Ren Xiaofeng, a former employee of the Agricultural Bank of China’s branch in Handan, north China’s Hebei Province, spent 14.1 million yuan ($2.24 million) on lottery tickets on a single day.
Over the course of a month in 2007, Ren and his colleague, Ma Xiangjing, the only two employees with the keys to the bank’s vault, stole a total of 45.35 million yuan ($7.20 million) from the vault and spent the entire amount on lottery tickets. Ren, mastermind of the bank theft, said in court later that the only two “big” prizes they won were 85,000 yuan ($13,500) and 18,000 yuan ($2,859), and they spent even these winnings on more lottery tickets.
Realizing that they would not win enough prize money to climb out of their hole of bank theft before being caught, Ren and Ma fled. Even as a fugitive, Ren had to fight the urge to buy lottery tickets for fear of being recognized and apprehended.
While Ren may be an extreme case of lottery addiction, lottery industry observers estimate that China has more than 4 million problem lottery players, or those whose addiction to gambling has begun to have an effect on their well-being and the well-being of their families.
“Problem gaming undermines social stability. For example, in some cases, lottery players embezzle public funds to buy tickets, which brings financial losses to the state. More commonly people gamble with their own savings that disrupts their lives,” said Wang Xuehua, Executive Director of China Center for Lottery Studies, Peking University.
What is worse, demographically the lowincome group, who can least afford to spend money, tends to be the worst hit by the spread of gaming addiction. According to a study conducted by Feng in 2008, China’s least developed provinces and autonomous regions in terms of per-capita GDP, such as Tibet Autonomous Region and Yunnan Province, had the highest Lottery Developed Index figures in China.
Although the new rules on lottery administration stipulate that lottery issuers and sellers must organize professional training for ticket sellers, it does not specify the aim or content of the trainings. While it is hoped that lottery sellers will be able to recognize problem lottery players and cut them off at a certain point, the way a bartender would cut off a problem drinker, whether any of them will actually do so remains an open question.
A reporter with the Legal Daily newspaper visited dozens of lottery stores in east China’s Jiangsu Province last December. Not one ticket seller advised the reporter on responsible gaming while many vendors tried to entice him by describing big prizes and lucky winners.
In 2011, the revenue of sports lotteries in Jiangsu exceeded 10 billion yuan ($1.59 billion), making Jiangsu the first province in China to hit this benchmark. According to lottery industry observers, this market boom has a lot to do with the introduction of a new type of quick draw lottery in Jiangsu last July, where players pick five numbers from 1 to 11. There are only 10 minutes between draws and no cap on how much one can bet. An anonymous former lottery addict told the Legal Daily that compared with regular lotteries, quick draw lotteries are even more addictive as the feedback is quicker.
“Some lotteries are too addictive while the advertising for lotteries focuses only on getting rich fast,” Wang said.
The Ministry of Finance issued a notice on February 1, saying that lottery issuers and sellers should shift the focus of their advertising away from big prizes and toward the charitable projects funded by lotteries.
In 2009, Wang’s center opened one of China first toll-free helplines for lottery addicts. She said that helplines alone are far from sufficient to solve the problem of lottery addiction, while the solution to the problem lies in promoting responsible gaming, which requires the efforts of the government, lottery issuers and the players themselves.
“Lottery players’ money is why this industry exists, but China still lacks a support system for addicts,” Wang said. “Part of the charitable funds raised by the lottery industry should be used to mitigate the industry’s own negative effects.”