Tourists regularly flock to the southern province of Hainan for its warm weather, sandy beaches, and palm trees. Exchange the comfy confines of one of the island’s many resorts for a seat at a local teahouse, however, and there’s a chance you’ll find yourself surrounded by men and women bent over pink-and-white scrolls, intensely debating the “patterns” they’ve discovered.

Innocuous as the activity may seem, they’re actually preparing for the province’s illegal — but highly popular — private lottery. This underground gambling system has become so entrenched in the local culture that instead of greeting others with the traditional “Have you eaten?” many residents simply ask: “Did you win?”

Unlike other forms of gambling, the bars to participating in a lottery are low. When a ticket costs as little as a few yuan, anyone can play. Despite its ostensible simplicity, however, there is a widespread perception among players that those good at spotting patterns will win more. This adds to the lottery’s appeal: It’s not just a game of luck, it also rewards extra time and effort.

As a result, some serious players’ daily schedules and social lives revolve around the lottery. The almost 80-year-old Chen, who has been playing the private lottery for decades, times his tri-weekly afternoon teahouse visits to coincide with lottery days. He devotes at least a dozen hours per week to studying the pink-and-white scrolls of past winners, which sell for 2 yuan ($0.28) each.

“If it weren’t for this lottery, Old Chen wouldn’t exercise or socialize as much as he does,” one teahouse owner said.

“Without the lottery, the teahouses wouldn’t be raking in this much money either,” Chen quipped, before answering a call from an old colleague inquiring about his predictions.

Hainan’s private lottery system emerged when public lotteries around the country went on hiatus to reconsolidate in 1994, giving private profiteers the opportunity to fill the gap. Local businesspeople commissioned community members to sell tickets directly to residents a few times a week. The sellers were also the point of contact when it came to claiming winnings; because they were drawn from local communities, other residents found them trustworthy.

This system persisted, even after the public lottery returned. Since the 1990s, the winning numbers of the private lottery actually duplicate the winning numbers of the Sports Lottery, which is run by the state. The private lottery, however, is vastly more popular.

Core to the private lottery’s continued success is its freedom from regulation. There are no age restrictions, for instance, and winnings aren’t taxed. Unlike the public lottery, tickets can even be bought online — though less digitally literate players like Chen trek to sale points around town, which are often hidden in plain sight.

Then there is the strong belief among the player base that the private lottery offers higher payouts than its publicly run cousin. This is technically true: A 1 yuan ticket for the private four-digit game could potentially yield a tax-free 9,000 yuan payout, while the equivalent game in the public lottery requires buying a 2 yuan ticket for the chance to win slightly over 10,000 yuan. Although the public lottery allows for higher payouts for more complex games, players balk at their perceived difficulty.

All in all, Hainan’s private lottery has hit on a winning formula, and its popularity has only been invigorated by a hunger for quick money at a time of stress and rising commodity prices. Income levels in Hainan are markedly lower than those of other provinces, yet prices have spiraled upward thanks to the province’s popularity as a tourist and retirement destination. Locals often remark that living in Hainan is like living in a third-tier city with first-tier prices. For many, the lottery is seen as a way out of these less-than-ideal circumstances.

For the government, however, every private lottery ticket sold represents lost revenue. A third of public lottery ticket sales are earmarked for public services, while players who win over 10,000 yuan must pay one-fifth of it back in taxes. The redirection of this potential income to private pockets could be seen as detrimental to society — certainly state media frames it that way.

The loss is less abstract on the individual level. The unregulated nature of the private lottery has resulted in sellers running off with cash prizes, among other problems. Its addictive quality, boosted by the perceived high odds of winning, is also an issue. The promise of winning has disincentivized job-seeking, according to locals, and led some to spend hundreds of yuan a week on the game, diverting funds from essential familial expenses like education.

The government’s response is a carrot and stick, handing out fines and jail time for illegal gambling while trying to draw players to the public lottery by mimicking the private lottery’s simpler rules. Other attempts to attract converts to the public lottery have largely fallen flat, however, as administrative costs constrain payout size, while plans to add horse-racing to the Sports Lottery have stalled for years.

As for punishment, it appears ineffective as a deterrent, as sellers and buyers alike readily return even after being penalized. Although private lotteries are clearly outlawed by national decree, there aren’t precise guidelines for which punishments can be meted out. Local authorities usually release offenders after a small fine or short detention. Indeed, those tasked with cracking down on the private lottery are typically locals, enmeshed in local trust networks and potentially also players themselves. They are therefore unwilling to reveal sellers unless absolutely necessary.

There’s no moral stigma attached to playing the private lottery in Hainan, either — especially when compared with other forms of gambling or illicit activity. Indeed, it’s become so prevalent that to frame the system as a moral problem would leave much of the population beyond the pale.

It will take a lot to change this status quo. Hainan’s relaxed, slow-paced environment is the perfect conduit for a lottery culture. While the private lottery is currently much more ingrained among the middle-aged and elderly, those in the younger generation also play and could become more interested as they get older. Younger players may be more likely to use social media WeChat to buy, however, potentially making it harder for authorities to detect. At the same time, evidence suggests participation is correlated with education, meaning that as education levels rise, residents may be less likely to play.

A key external threat to Hainan’s lottery culture looms, however. The province’s push toward becoming a free-trade zone could not only increase pressures to crack down on the illicit system, but also increase employment opportunities for locals, mitigate brain-drain from the province, and drastically alter community demographics and local trust networks.

All of these factors play a role in the private lottery’s ability to thrive, but none may be enough to drive it out of business. After all, it has survived over two decades of immense socioeconomic change in Hainan. There’s a lesson to be learned from that, and the government would be well-served to note the fundamental economic dissatisfaction that feeds the system, as well as the community-building benefits the private lottery has brought a population that, like its mainland counterparts, is on its way to becoming more individualistic. These needs must be addressed, through the lottery or otherwise.

Editors: Kilian O’Donnell and Cai Yiwen; portrait artist: Wang Zhenhao.

(Header image: A man examines lottery numbers in Hainan province, May 2020. Courtesy of the Author)