Regulations on Administration of Lottery

Order of State Council No.554

May 4, 2009

The Lottery Regulations, which were adopted at the 58th executive meeting of the State Council on 22 April 2009, are hereby promulgated and shall come into force on 1 July 2009.

Premier Wen Jiabao

Lottery Regulations

Chapter 1 General Provisions

Article 1 These Regulations are formulated to tighten the administration of lotteries, regulating the development of lottery market, maintaining the order of lottery market, protecting the legitimate rights and interests of lottery players and promoting the development of social welfare cause.

Article 2 For the purpose of these Regulations, "lottery tickets" mean the tickets permitted to be issued and legally sold by the state for the purpose of raising social welfare funds to promote social welfare development, and available for natural persons to purchase on a voluntary basis for the chance of winning a prize according to the specific rules.
Neither principal nor interest will be returned or paid to buyers of lottery tickets.

Article 3 The State Council gives special permission for issuance of welfare and sports lottery tickets. Issuance of other lottery tickets without the special permission of the State Council is prohibited. Issuance or sales of overseas lottery tickets in the mainland China is prohibited.

Article 4 The issuance, sales and drawings of lottery tickets shall follow the principle of openness, justice, fairness and faithfulness.

Article 5 The financial department under the Sate Council shall be in charge of the nationwide supervision and administration of lotteries. The civil affairs department and the administrative department for physical culture and sports under the State Council shall be in charge of the nationwide administration of welfare and sports lotteries respectively according to their own duties.
The financial departments of people's governments of various provinces, autonomous regions, and municipalities directly under the Central Government shall be in charge of the supervision and administration of lotteries within the area under their respective administration jurisdiction. The civil affairs departments and administrative departments for physical culture and sports of the people's governments of provinces, autonomous regions, and municipalities directly under the Central Government shall be in charge of the administration of welfare and sports lotteries according to their own duties within the area under their respective administrative jurisdiction.
The public security organs of the people's governments at or above county level and the departments for industry and commerce at or above county level shall, within the scope of their own functions, lawfully investigate and deal with illegal lotteries and maintain the order of the lottery market.

Chapter 2 Administration on Issuance and Sales of Lottery Tickets

Article 6 The welfare lottery issuing agencies and sports lottery issuing agencies legally established by the civil affairs department and the administrative department for physical culture and sports under the State Council respectively (hereinafter collectively as the "lottery issuing agencies") shall be in charge of the nationwide issuance and sales of welfare and sports lottery tickets respectively.
The welfare lottery sales agencies and sports lottery sales agencies legally established by civil affairs departments and administrative departments for physical culture and sports of the people's governments of provinces, autonomous regions and municipalities directly under the Central Government respectively (hereinafter collectively as "lottery sales agencies") shall be in charge of the sales of welfare and sports lottery tickets respectively within the area under their respective administrative jurisdiction.

Article 7 Applications by lottery issuing agencies for instituting or ceasing any specific type of welfare or sports lottery game (hereinafter the "type of lottery") or for change of any examination and approval item related to the type of lottery shall be submitted to the financial department under the State Council in accordance with the procedures as specified herein for approval.
The financial department under the State Council shall examine the applications of the lottery issuing agencies based upon the needs for the sound development of the lottery market and following the principle of reasonably planning the lottery market and structure of type of lottery and strictly controlling risks of lottery games.

Article 8 Lottery issuing agencies applying for instituting a type of lottery shall be subject to the approval of the civil affair department or the administrative department for physical culture and sports under the State Council, and deliver the following application materials to the financial department under the State Council:
(i) The application;
(ii) rules for the type of lottery;
(iii) method and scope of the issuance;
(iv) market analysis report and technical feasibility analysis report;
(v) procedures for drawing and prize claim; and
(vi) the risk control plan
The financial department under the State Council shall solicit the public opinions on the instituted type of lottery through expert evaluation and hearing, examine the application and make a written decision within 90 working days upon acceptance of the application.

Article 9 Lottery issuing agencies applying for change of any examination and approval item related to the type of lottery such as the rules, methods and scope of issuance shall be subject to the approval of the civil affairs department and administrative department for physical culture and sports under the State Council, file an application with and submit the materials in connection with the change to the financial department under the State Council. The financial department under the State Council shall examine the application and make a written decision within 45 working days upon the acceptance of the application.

Article 10 Lottery issuing agencies applying for ceasing the type of lottery shall be subject to the approval of the civil affairs department or the administrative department for physical culture and sports under the State Council, file an written application with and deliver the materials in connection with the cessation of the type of lottery to the financial department under the State Council. The financial department under the State Council shall examine the application and make a written decision within 10 working days upon the acceptance of the application.

Article 11 Lottery issuing agencies approved to institute or cease the type of lottery or change any examination and approval items related to the same shall make public the relevant information ten days before the institution, cessation or change.

Article 12 For protection of the social public benefit, the financial department under the State Council may take necessary measures, make a decision to change the examination and approval items in connection with the type of lottery or cease the type of lottery in emergency circumstances.

Article 13 Lottery issuing agencies and lottery sales agencies shall purchase standard conformance lottery equipment and technical services according to the provisions of the government procurement laws and regulations.
The standards for lottery equipment and technical services shall be developed by the financial department under the State Council in conjunction with the civil affairs department and administrative department for physical culture and sports under the State Council in accordance with the provisions of the national standardization laws and regulations.

Article 14 Lottery issuing agencies and lottery sales agencies shall establish risk management system and suspicious capital reporting system to ensure the safety in issuance and sales of lottery tickets.
Lottery issuing agencies and lottery sales agencies shall be responsible for the management of the data stored in the lottery sales system, the management of lottery drawings and prize claims, and collective management of lottery funds by themselves instead of authorizing others to take the responsibility.

Article 15 Lottery issuing agencies and lottery sales agencies may appoint entities or individuals to act as their agents for sales of lottery tickets and shall enter into the agreement for government procurement of lottery tickets with the lottery sales agents that have accepted the appointment. The model texts of agency contract for sales of welfare and sports lottery tickets shall be formulated by the civil affairs department and administrative department for physical culture and sports under the State Council respectively.
No lottery sales agent shall appoint others to sell lottery tickets on its behalf.

Article 16 Lottery sales agencies shall equip lottery betting special equipment for lottery sales agents. The lottery betting special equipment remains to be owned by the lottery sales agencies, and shall not be lent, leased or sold by lottery sales agents.

Article 17 Lottery sales agencies shall make an overall plan for the layout of the lottery sales location under the guidance of the lottery issuing agencies. The lottery sales locations shall have the lottery sales logo and warning poster established according to the uniform requirements of the lottery issuing agencies.

Article 18 No lottery issuing agency, lottery sales agency or lottery sale agent shall:
(i) make any false or misleading promotion;
(ii) conduct unfair competition by means like defaming rivals, etc..;
(iii) sell lottery tickets to minors; or
(iv) sell lottery tickets on credit

Article 19 If the lottery tickets have to be destroyed, the destruction shall not be conducted unless it is reported to and approved by the financial department under the State Council and carried out under the supervision of the civil affairs department or the administrative department for physical culture and sports under the State Council.

Article 20 Lottery issuing agencies and lottery sales agencies shall promptly make public the full information on the issuance and sales of the lottery tickets and accept the supervision of the social public.

Chapter 3 Administration on Lottery Drawings and Prize Claims

Article 21 Lottery issuing agencies and lottery sales agencies shall draw the winning numbers of a lottery according to the approved rules and drawing procedures for the type of lottery.
The civil affairs department and administrative department for physical culture and sports under the State Council, as well as the civil affairs departments and administrative departments for physical culture and sports of the people's governments of provinces, autonomous regions and municipalities under the Central Government shall tighten the supervision of lottery drawing activities to ensure its openness and fairness.

Article 22 Lottery issuing agencies and lottery sales agencies shall ensure the completeness, accuracy and safety of the lottery sales data, and shall not check up, alter or delete any sales data during the period from the time of sealing up the current lottery sales data to the end of the drawing activities. .

Article 23 Lottery issuing agencies and lottery sales agencies shall tighten the management of drawing equipment to ensure its normal operation and equip backup drawing equipment.

Article 24 Lottery issuing agencies and lottery sales agencies shall make public the information on the sales and drawing results of the current lottery tickets on a timely basis.

Article 25 Winning ticket holders shall, within 60 days from the date of drawing, claim the prize at the designated place by presenting the winning tickets, as well as the identify document if it is required according to the rules for the type of lottery. Prizes that remain unclaimed exceeding the specified time limit shall be considered as abandoned prizes.
Use of fake or altered lottery tickets to claim prize is prohibited.

Article 26 Lottery issuing agencies, lottery sales agencies and lottery sales agents shall draw the winning numbers of a lottery according to the rules and drawing procedures for a type of lottery.
The prizes for winning ticket holders shall be paid in a lump sum in RMB cash or by check.
No prize claim shall be targeted at minors.

Article 27 Lottery issuing agencies, lottery sales agencies and lottery sales agents, as well as other persons with the knowledge of the individual information of lottery winners because of their positions or business shall keep the individual information of the lottery winners in confidence.

Chapter 4 Administration of Lottery Funds

Article 28 Lottery funds consist of lottery prize, lottery issue cost and lottery welfare funds. The composition proportion of lottery funds shall be determined by the State Council.
The specific composition proportion of lottery funds for the type of lottery shall be determined by the financial department under the State Council according to the decision of the State Council.
The proportion of lottery issue cost may be reduced with the expansion of the lottery issue size and the increase of types of lotteries

Article 29 Lottery issuing agencies and lottery sales agencies shall open lottery funds account for calculation of lottery funds according to the provisions of the financial department under the State Council.

Article 30 The financial department under the State Council and financial departments of the people's governments of provinces, autonomous regions and municipalities under the State Council shall establish an information system for lottery issuance, sales and funds management to get access to the information of the lottery sales and the capital flow on a timely basis.

Article 31 The lottery prize shall be used as payments to winning lottery holders. The maximum amount of a lottery prize in a single bet shall be determined by the financial department under the State Council according to the development situation of the lottery market.
Prizes that remain unclaimed exceeding the specific time limit shall be credited into the lottery welfare funds.

Article 32 The lottery issue cost shall be specially used for payment of operation cost of lottery issuing agencies and lottery sales agencies and payment of sales expenses of lottery sales agents.
The operation cost of lottery issuing agencies and lottery sales agencies shall be subject to the administration on both the receipt and expenditure, and the expenditure shall comply with the financial management system of lottery issuing agencies and lottery sales agencies.

Article 33 The lottery welfare funds shall be specially used for supporting social welfare causes such as social benefit or sports, and shall not be used to balance the general financial budget.
The lottery welfare funds shall be included into the budget and subject to the administration on both the receipt and expenditure according to the procedures for management of government funds.

Article 34 Lottery issuing agencies and lottery sales agencies shall turn over the lottery welfare funds and the operation cost allocated from the lottery issue cost on a timely basis according to the decision of the financial department under the State Council and shall not withhold or misappropriate the lottery welfare funds and the operation cost allocated from the lottery issue cost. The financial department shall examine and allocate the operation cost for lottery issuing agencies and lottery sales agencies on a timely basis.

Article 35 The policy for distribution of lottery welfare funds shall not implemented unless a proposal is offered by the financial department under he State Council in conjunction with the civil affairs department and administrative department for physical culture and sports under the State Council and approved by the State Council.

Article 36 Organizations that administer and use the lottery issue cost and lottery welfare funds shall be subject to the supervision of the financial department, auditing offices and social public according to law.
Organizations that administer and use lottery welfare funds shall annually make public the information on use of the welfare funds.

Article 37 The financial department under the State Council and financial departments of the people's governments of provinces, autonomous regions and municipalities under the Central Government shall annually report to the people's governments of the same level the information on raising, allocation and use of lottery welfare funds for the previous year, and make an announcement to the social public.

Chapter 6 Legal Liability

Article 38 Issuance or sales of lottery tickets without permission or issuance or sales of overseas lottery tickets within the mainland China in violation of the provisions of the Regulations, if constituting a crime, shall be subject to criminal liability, and, if constituting no crime, shall be subject to a public security punishment imposed by public security organ and confiscation of illegal proceeds.

Article 39 Any lottery issuing agency or lottery sales agency liable for any one of the following acts shall be ordered of suspension of operation for rectification, confiscated of any illegal proceeds, fined three times of the illegal proceeds, and the managers directly responsible and other direct responsible persons shall be punishable according to law; in case of constituting a crime, the criminal liability shall be held:
(i) instituting or ceasing the type of lottery without approval or changing any examination and approval item related to types of lotteries without approval;
(ii) failure to issue or sell lottery tickets or conduct drawing and prize claim according to the approved rules, method and scope of issuance, procedures for drawing and prize claim for the type of lottery;
(iii) appointing others to be responsible for the data management of lottery sales system, management of drawing and claim or collective management of lottery funds;
(iv) checking up, changing or deleting lottery sales data in violation of the relevant provision;
(v) selling lottery tickets on credit;
(vi) destroying lottery tickets without approval; or
(vii) withholding or misappropriating lottery funds.

Article 40 Any lottery issuing agency or lottery sales agency liable for any one of the following acts shall be ordered of correction by the financial department, confiscated of illegal proceeds, and the manager directly responsible and other directly responsible persons shall be punishable according to law:
(i) purchasing non-conformance lottery equipment or technical services;
(ii) making false or misleading promotion;
(iii) conducting unfair competition by means like defaming rivals, etc.;
(iv) selling lottery tickets to minors;
(v) divulging personal information of lottery winners;
(vi) failure to account unclaimed prizes into the lottery welfare funds; or
(vii) failure to turn over the lottery welfare funds and the operation cost allocated from the lottery issuing cost.

Article 41 Any lottery sales agent liable for any one of the following acts shall be ordered of correction by the civil affairs department and administrative department for physical culture and sports, fined between CNY2,000 and CNY10,000, and confiscated of illegal proceeds:
(i) appointing others to sell lottery tickets on its behalf or leasing or selling lottery betting special equipment;
(ii) making false or misleading promotion;
(iii) conducting unfair competition by means of defaming rivals, etc.;
(iv) selling lottery tickets to minors;
(v) selling lottery tickets on credit
Where a lottery sales agent is punishable on account of any of the foregoing acts, the lottery issuing agency or lottery sales agency shall have the right to terminate the lottery agency contract.

Article 42 Forging or altering lottery tickets or use of forged or altered lottery ticket to claim prize shall be subject to public security punishment, and, in case of constituting a crime, be subject to criminal liability.

Article 43 organizations that administer or use lottery welfare funds violating the provisions on administration and use of lottery welfare funds shall be ordered of correction within a specified time limit, confiscated of illegal proceeds, and, in case of failure to make the correction within the specified time limit, shall be subject to confiscation of the assets formed by use of the lottery welfare funds and revocation of the qualification to use lottery welfare funds.

Article 44 Staff members of the financial department, civil affairs department and administrative department for physical culture and sports with the duties of administering lottery in accordance with the provisions hereof abusing power, neglecting duties, engaging in malpractices for personal gains in the supervision and administration of lottery, if constituting a crime, shall be subject to criminal liability, and, if constituting no crime, shall be punishable according to law.

Chapter 6 Supplementary Provision

Article 45 The Regulations shall come into force on 1 July 2009.