These days, you’ll find many different kinds of gaming and gambling in the People’s Republic of China. That includes betting on PC games, sports betting, the lottery, and terminal machines that are much alike to Western slot machines. In fact, in 2012, the combined profit of the Chinese gambling market reached an astounding 40 billion dollars! And if we include Macau and Hong Kong in these statistics, the People’s Republic of China definitely becomes the biggest gambling market in the world.

Seeing as China’s legal system is, in many regards, extremely different from the ones utilized in Western nations, it’s interesting to see how it handles modern questions. For example, the loot box question in online multiplayer games. Many countries around the world have had different approaches to this, and China’s may actually surprise you! But before we get into that, we’ll explore the history and development of Chinese gambling laws. So stay tuned, and read on to learn more!

Chinese Gambling Laws

China is, in legal terms, definitely one of the most interesting countries in the world when it comes to gambling laws. And the reason for this is painfully obvious — once you dig beneath the surface. Because, as we’ve already said, China is the world’s biggest gambling market in terms of single countries. And yet simultaneously, it’s one of the countries with the most restrictive gambling laws in place.

In fact, under Article 303 of the Chinese Criminal Law code, gambling is completely prohibited. And the punishment for anyone caught gambling as a profession or organizing a gambling game for a profit and running a gambling establishment is up to three years in jail, without the possibility of bail.

As harsh as this is, some things are worth noting. First of all, China does not ban casual and social gambling. So a poker night with your friends is still legal in China if the person organizing it does not retain a profit solely from hosting the game. And secondly, gambling is legal in the special administrative regions of Macau and Hong Kong; which is where most avid Chinese (and worldwide) gamblers travel to when they want to have a good time.

Online Gambling in China

If you’re not gambling in one of the special districts where this is an allowed practice, there will be no difference in criminality between playing online games on offshore gambling websites or illegal brick-and-mortar casinos. Though unlike in the Western world, the government actually blocks these websites in China. Also, the people who play there are rarely prosecuted and arrested.

History of Gambling in China

The view of the Chinese government on gambling and its legal standpoint is something that has evolved throughout history; indeed, the same goes for many centuries. So we’ll go through the interesting history of Chinese gambling laws and see what socio-economic changes affected them all the way until the present day. So for starters, how old is gambling in China? While there are no credible sources supporting this claim, some local historians say this practice dates back to 2300 BCE.

The origin of this claim can be found in excavations of Han-era China, which existed in the third century B.C. And in these archeological sites, excavators found numerous Boju and Liubo board games. And some historical records, though without proof, claim these games were played for thousands of years prior. Naturally, this could only be hyperbole. But it’s not such a distinct impossibility that this is true, seeing as versions of this board game were found to be as old as 1500 BCE, albeit in India and Egypt. But similarly to China, many of these places contain ancient historical records depicting gambling. Conversely, these are merely board games, and there are no accurate records that prove such games were actually used for gambling. But it’s reasonable to assume so, seeing as they were used for such purposes in the Medieval Era.

So what are the oldest gambling devices found in China? These would be the simplest devices of them all — dice, dating back to the 7th century B.C. And as for the first written proof of gambling, such records date back to 200 B.C. These records tell the story of a ruler named Cheung Leung, who invented a gambling game to gather money for a defense project at the time. His invention represents the earliest form of the modern game of Keno. There are similar stories which say that Keno was invented by the Chinese state for the funding of the Great Wall, but these are later stories that are most likely myths.

During the Qing Dynasty (end of the 3rd century B.C.), there was a lot of evidence suggesting the existence of gambling games; but judging from the infrequent mention of them in historical records, they were probably not a historical phenomenon. At the time, a more influential game developed in China; CuJu, which is basically a simpler and earlier form of soccer — or at least a Chinese version of it. Thus, sports betting on this game became one of the first types of gambling to truly take China by storm.

By the time the Han Dynasty rolled around, there was much more writing about gambling to be found in the archives. And as history moved on, the Chinese people began telling more and more stories about the gambling of yore. That’s when the first references of CuJu being played in the 3rd millennium B.C. appeared, which is almost certainly a fabrication. After all, you could find no such findings in the written records just a century earlier. In conclusion, gambling and sports rose in China simultaneously, and it happened during the Han Dynasty.

Earliest Gambling Laws

But what are the earliest gambling laws that could be found on the mainland? These date back to the 5th century B.C. Wei dynasty. According to their laws, people caught gambling would receive a monetary fine. Interestingly enough, these laws actually represent the first written regulation of gambling that we know of. That is an archaic word, though, no longer used in China. The currently-used Chinese term for gambling is still relatively ancient, though, dating back to the Tang Dynasty in the 7th century A.D.

And that’s no wonder, seeing as the Tang Dynasty era is basically synonymous with gambling in China. In those ages, archives say that gambling basically penetrated all walks of life. And while card games, as well as dice and tile games, had developed by then, sports gambling was still the most popular kind of wagering. And the game of CuJu was now in full swing for almost a millennium, with many professional leagues being played all over the country. Apart from CuJu, the Chinese also developed Jiju, a simpler form of Polo, ice-skating, and Chuiawan, something akin to gold, in the meantime. Interestingly enough, gambling was still widely banned, and the penalties were much harsher for state officials. If caught, many of them would even be executed.

In the Song Dynasty, from the 10th to the 13th century A.D., Emperor Taizu Song gave orders for some of the harshest punishments for gambling ever; viewing it as a dangerous sin. Even casual gamblers could get their hands chopped off as punishment in those days. Plus, members of the military who were caught gambling or allowing their subordinates to gamble would face corporal punishment. Thus, the popularity of gambling slowly but surely declined during the Song dynasty. But that would change once more, with the onset of the 16th century and the European imperialism in Asia.

Foreign Imperialism Period

In 1557, the Portuguese crown received a lease for Macau and made it their permanent base of trading operations in East Asia. Seeing as they could also govern the territory according to their own laws, there was no punishment for gambling in Macau. Thus, Fan Tan, Pai Gow, and similar games could freely develop there, without fear of reprisal. In fact, these were so widespread that they were literally played in the street. Even though it was just in one territory, this was one of the most rapid developments for gambling in China.

During the 19th century, some types of legal gambling came to China proper. And here, we can draw an interesting parallel between the earliest origins of Chinese gambling and its similar development two millennia later. Just like the early Chinese Emperors, the late Qing dynasty also needed additional funds for their defense efforts — and just like the rulers of yore, they also turned to gambling to find the riches they needed. Thus, during the Opium Wars and the Sino-French War, Chinese regulations on gambling became far less restrictive; though the prohibitions would return later.

We’d also be remiss not mentioning the history of gambling in Hong Kong. While Macau became a colony of Portugal, Hong Kong would have a similar fate, but with Britain. Although, the Chinese government would regain its ownership of Hong Kong at the end of the 20th century. Today, both Macau and Hong Kong represent special districts in China. They have their own currencies, passports, and laws, as well as a degree of self-government. The same goes for Shanghai and Taiwan, both of which had stints of Japanese occupation.

And these periods of colonization brought a lot of foreign gambling to China. In the second half of the 19th century, Shanghai, Hong Kong, and Macau developed horse racing. And in fact, Hong Kong is one of the world’s centers of horse racing, with planet-wide renown. As for Macau, it represents one of the oldest casino markets in the entire world. The Portuguese state began regulating and taxing casinos in the area all the way back in 1846. To this day, Macau represents the biggest casino market in terms of gambling profits. Also, Taiwan was one of the first areas developing a lottery in China, which the Japanese occupiers introduced in 1906.

Early Chinese Lottery

Speaking of the development of the Chinese lottery; it’s one of the most recent forms of gambling to appear in China, at least from a historical perspective. It was one of the measures introduced by the late Qing Dynasty in 1885, looking at Spain’s success with using lotteries to generate tax revenues at the onset of the Spanish-American war. The Qing dynasty copied that model and gave out licenses for state lotteries which would, in turn, gather them taxes. The first lottery appeared in Canton, a region bordering Macau — the Wei Seng Lottery.

Rigged Games

However, state-operated lotteries did not last very long. Already in 1905, a lottery company was revealed to have been rigging the jackpots for their relatives and friends. The police protected these companies and faced angry mobs of lottery participants. Later, the press would reveal the truth about the event, resulting in a province-wide ban of lotteries. Seeing as similar scandals soon started revealing themselves in other provinces across the country, the lottery ban was slowly expanded for them as well.

The Republic of China

Once the Republic of China was established in 1912, almost all kinds of gambling (including lotteries) were entirely banned. But while the nation-wide regulations and prohibitions for gambling existed, the country as a whole was simply not stable enough. And in the 40-odd years before the rise of the People’s Republic of China, many warlords ruled in the various regions, instead of the central government. Thus, they organized lotteries under the guise of charity and various relief efforts. These local warlords also encouraged illegal horse tracks and casinos in their respective regions.

The People’s Republic of China

Finally, we arrive at the currently existing regime in China — the People’s Republic of China. This government came about after the Chinese Civil war between the Nationalist government and the Communist-led rebels. Their leader, Mao Zedong, founded the People’s Republic of China in 1927, as a communist one-party state. Until Zedong’s death in 1976, he remained at the helm of the country in the position of Chairman.

It wouldn’t be an overstatement to say that Zedong’s reign wasn’t the best time for gambling in China. In that era, Zedong’s opinion was basically law — and in many cases, it would become literal law. Thus, his negative view on gambling as one of the greatest vices of the communist society didn’t bode well for its legal status in China. And soon enough, during the 50s, the PRC instituted harsh labor punishments for those caught gambling in illegal casinos. A similar practice would remain in the 60s, where the so-called Cultural Revolution that combated counter-revolutionaries completely banned mah-jong, even if no bets were made.

But the death of Mao Zedong in 1976 paved the way for significant change in China. As the 1980s began, the Mahjong ban was one of the first ones to be repealed, so people could play the game. Furthermore, sports betting became partially allowed, with bans lifted during the Beijing International Marathon of 1984. After that, the National Sports Commission allowed this as a regular activity. Sure, some overtures were made a couple of years later to prohibit sports betting, but the internal debate raged on.

Chinese Gambling Laws and Overwatch

Now that we’ve covered the history of the legislative attitude of the Chinese government toward gambling, we can actually tackle how Overwatch plays into all of this. As of now, Overwatch players in China will be able to directly purchase in-game currency, bringing the game in line with the Chinese gambling laws that went into effect earlier this year.

But players won’t be allowed to simply purchase any kind of currency. In fact, for 12¥, players will have the option of purchasing five pieces of in-game currency and two loot boxes. There are more expensive options, such as five loot boxes and 15 pieces of in-game currency for 30¥, and 11 loot boxes and 30 pieces of in-game currency for 60¥.

Naturally, these options will be country-specific for China. These options are already available on Chinese test servers for Overwatch, and they’re there as a way to circumvent the Chinese restrictions on the sale of chance-based items in-game. So that’s the workaround; players will have the option of buying a small amount of in-game currency and receiving “free” loot boxes as a gift.

Interestingly enough, Blizzard was also forced to reveal the drop rates of loot boxes on Chinese servers. So approximately every 5th box has an epic item in it, while every 13th box has a legendary item inside, according to Blizzard Entertainment. Additionally, at least one piece of equipment you can find inside is guaranteed to be rare or better.

With China being the first nation to regulate the sale of loot boxes, it remains to be seen if Blizzard will implement the same system worldwide. It’s an unlikely outcome, though; seeing as most other legislations aren’t as concerned with defining loot boxes in great detail. If regulation on loot boxes exists — it’s usually there to just ban them outright. And seeing as China is generally a more restrictive country than most, in the legal sense, it’s quite interesting to see them being actually more liberal in this regard.