Scratch cards, born for quitting gambling
The "gambling instinct" deep in human nature is far more stubborn than many people imagine.
The original intention of launching scratch-off lottery tickets was actually to help people quit gambling.
The sales volume of scratch-off lotteries surged sharply a few years ago.
There are many explanations online. Some say the young generation is under great pressure and needs low-cost surprises, while others attribute the phenomenon to lottery stores moving into shopping malls, driven by sales channel expansion.
These claims are not entirely unreasonable, but they may only scratch the surface of the problem.
We can refer to an official document.
In October 2020, the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sport jointly issued a notice for the lottery industry, proposing to "timely launch games with low stimulation, low addiction risk and high entertainment value".
The release time of this document perfectly coincides with the rising popularity of scratch-off lotteries.
01
Academically, scratch-off lotteries have a formal professional name: "instant lottery tickets".
As the name suggests, instant lotteries allow players to buy tickets and get results on the spot, without waiting for several days after purchase like the Double Color Ball lottery.
You only need to spend 10 or 20 yuan to buy a ticket, then scrape off the coating on the ticket surface to see the winning result directly. The most common gameplay is to scrape out the amount of money, and you win exactly that amount. Generally speaking, you will win at least once after several attempts.
There are also other gameplay modes. For example, you win if the number you scrape out matches the "lucky number" printed on the ticket, or you win if three identical patterns are uncovered.
The prize return rate of scratch-off lotteries can reach 65%, which means that on average, for every 100 yuan spent, you can get about 65 yuan back, much higher than that of lotto lotteries such as Double Color Ball.
Moreover, most of the bonuses are small amounts of several or dozens of yuan, designed to ensure that every player can get a small reward and taste the sweetness of winning.
This feeling is actually very similar to the old drink promotions where you could get another free bottle after unscrewing the cap.
This type of gameplay was invented in the United States in 1974. After China opened its lottery market in the 1980s, this type of product was already included in the early offerings.
In 2005, China Welfare Lottery renamed its instant lottery product "Gua Gua Le". In 2008, riding on the popularity of the Olympic Games, the Sports Lottery's instant lottery was renamed "Ding Gua Gua", a name that has been used to this day.
Generally speaking, however, its popularity only lasted for a short period right after its launch. After the public got tired of the novelty, its performance stayed lukewarm for a long time.
In 2008, the total national sales of scratch-off lottery products reached 200.85 billion yuan. The figure rose for a while in the following years, but ten years later in 2018, the number was still only 225 billion yuan, almost stagnant.
It is worth noting that the total size of the national lottery market reached 5.114 trillion yuan in 2018, and scratch-off lotteries only accounted for 4% of the market, barely making any noticeable contribution.
But after 2021, the scratch-off lottery market took off, and its market share suddenly surged to around 20% in the following years.
02
So here comes the question: why did this old product that had been struggling for more than a decade suddenly become popular again?
The key to this question lies in the critical issue hidden in the document we mentioned at the beginning.
In the document issued by the relevant authorities in October 2020, it is clearly stated in black and white: "Effectively balance the entertainment and gaming attributes of lottery games, timely launch games with low stimulation, low addiction risk and high entertainment value, and highlight the public welfare nature and social responsibility of state-run lotteries."
The full name of this document is Notice of the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sport on Matters Concerning the Orderly Withdrawal of High-frequency Fast-draw Lottery Games.
"Orderly withdrawal of high-frequency fast-draw lotteries", as the name suggests, means to phase out the "high-frequency fast-draw" type of lottery from the market.
From the promulgation in October to the Spring Festival a few months later, all high-frequency fast-draw games were completely removed from the market, and the sales of scratch-off lotteries surged sharply in the following whole year.
It can be said that as a product with lower addiction risk, scratch-off lotteries have in fact taken the role of a substitute after the withdrawal of high-frequency fast-draw lotteries.
"High-frequency fast-draw" sounds quite exciting just from its name.
It refers to a type of lottery gameplay: you select a set of numbers to place a bet, and the lottery is drawn every ten or twenty minutes. You can redeem the prize on the spot if you win. If you lose? It does not matter, the next draw will come in ten minutes.
A lottery store can hold dozens of draws a day, which means you can keep playing nonstop.
You can also use multiple bets and number chasing strategies: pick one or a group of numbers, if you do not win this round, double your bet in the next round, betting that as long as you win once, all the money you lost before can be won back.
As we all know, people are usually most unwilling to admit defeat right after losing money, and "high-frequency fast-draw" just gives them another chance the moment they get red-eyed from losing.
As long as I am still at the gambling table, I will never lose!
This logic is understood by you, me, stock traders, pathological gamblers, and even Chief Editor Hu.
You may have heard of names such as "Shi Shi Cai", "11 Choose 5", "Kuai 3", all of which belong to this category.
High-frequency fast-draw lotteries have always been the core products of lottery stores. At their peak, they accounted for about 40% of the total sales of welfare lotteries and sports lotteries, forming a 100-billion-yuan scale business.
At the same time, it has always been accompanied by a controversy that it is far too addictive.
Some heavy players will sit in the store for hours nonstop, placing bets and waiting for draws until the lottery store closes.
03
So here comes another question: if it is so addictive, why was it ever allowed to be sold?
The answer may sound unbelievable to most people: to help people quit gambling.
Yes, it is for the purpose of helping people quit gambling.
One of the important reasons for its initial promotion was to crack down on a highly harmful form of gambling at that time: underground private lotteries.
Back to the late 1990s, a form of underground gambling called "buying markers" became popular in some rural areas in Guangdong, Hainan and other provinces.
The gameplay is very simple: you pick a number from 1 to 49 and place a bet, then wait for the result of the Hong Kong Mark Six lottery. Mark Six is a legal lottery in Hong Kong that holds draws every week. If the number you pick matches the winning number, the "bookmaker" will pay you 40 times your stake.
Note that the "bookmaker" here uses the Hong Kong lottery results to accept bets, collect money and pay out prizes, which is an illegal private bookmaking operation, so it is commonly referred to as "private lottery".
The 1990s was an era when Hong Kong movies were extremely popular. Gambling-themed films such as *God of Gamblers*, *Saint of Gamblers*, and *Knight of Gamblers* were very popular in the Chinese mainland, and the gambling terms and gameplay from Hong Kong were also introduced to the mainland along with the films.
Guangdong and Hainan, which are geographically close to Hong Kong, once suffered from rampant private lotteries. At its peak, the annual sales of private lotteries in Hainan reached 1.8 billion yuan. Later, this gambling form spread to Fujian, Guangxi, Zhejiang, Hunan and other regions.
In Fenkou Town, Chun'an County, Zhejiang Province, there are only 80,000 residents in the whole town, but the total number of people participating in "buying markers" in five years reached 1 million person-times. The situation is even more extreme in some rural areas in Hunan: people who lost all their money on private lotteries had to mortgage their houses to bookmakers, and some even sold their unharvested crops and draft cattle to pay off debts.
In some other places, the cash in the entire town was almost drained by "buying markers". For example, the deposits of credit cooperatives in 17 towns of Anhua County, Hunan decreased by 66 million yuan within ten days.
Not to mention the derivative crimes that came along with it, such as usury, illegal debt collection, bookmakers running away with funds, and even theft and robbery.
The public security departments have been cracking down on these phenomena severely, with thousands of cases investigated and dealt with every year.
However, due to the deep-rooted gambling instinct in human nature, this crackdown is just like playing whack-a-mole: when you take down one operation, three more may pop up elsewhere. As long as the gambling instinct of players is strong enough, private lotteries can never be completely eradicated.
Later, the governance idea changed. As the old saying goes, blocking is less effective than dredging. Since the gambling instinct in human nature cannot be banned, it is better to provide a safe and legal channel to divert these demands rather than letting gambling spread underground.
In 2003, Guangdong, where private lotteries were most rampant, launched a lottery called "Hao Cai 1", whose gameplay was almost a copy of private lotteries: you pick a number from 1 to 36 to place a bet, and you win if your number matches the "special number" in the draw.
To encourage lottery players to switch from private lotteries to official ones, the authorities deliberately raised the prize return rate to 65%. The Guangdong Provincial Welfare Lottery Center once stated directly that the launch of these products was aimed at cracking down on private lotteries.
At first, "Hao Cai 1" held draws three times a week, and later it was changed to daily draws. But that was not enough. Later, various faster products were launched across the country, such as "11 Choose 5" in Shandong, "Kuai 3" in Jiangsu, and "Shi Shi Cai" in Chongqing, all of which held draws every ten minutes, known as "high-frequency fast-draw" products.
Within a few years, "high-frequency fast-draw" products spread all over the country.
This measure did work. Many private lottery players turned to official legal lotteries, and the private lottery industry was impacted and restricted.
However, after more than ten years of development, the "high-frequency fast-draw" product itself has, to some extent, turned from a hero into a monster.
Therefore, by the Spring Festival of 2021, all such products had stopped being sold across the country.
Then the sales of instant lotteries nearly doubled in that year, and doubled again in 2023 to 119 billion yuan.
Therefore, a large part of the growth of scratch-off lotteries came from the original market share of high-frequency fast-draw lotteries.
So from a certain perspective, scratch-off lotteries have also taken over the responsibility of high-frequency fast-draw lotteries to "crack down on private lotteries" and "help people quit gambling".
04
In fact, we can trace this story even further back.
Scratch-off lotteries replaced high-frequency fast-draw lotteries, which were originally designed to fight against private lotteries. Then where did the Hong Kong Mark Six that private lotteries borrowed from come from?
In fact, it was created for roughly the same reason.
In 1975, the Hong Kong government launched a legal lottery specifically to crack down on the rampant "Zi Hua" gambling at that time, which was the origin of Mark Six.
In other words, it is also a way to divert people's gambling demands through a legal approach with lower harm.
It has to be said that this is a cycle of sorts.
The first sentence of the preamble of the World Lottery Association's charter states: "The history of human fondness for gambling is almost as long as the history of humanity itself."
The "gambling instinct" deep in human nature is far more stubborn than many people imagine.
It exists in the aunties who go all in on Bitcoin and gold as soon as they see a piece of related news, and in the retired old men who transfer their life savings to a strange account in Southeast Asia.
It exists in those "wise voices" who take hundreds of thousands of yuan in loans to open unbranded milk tea shops in live streaming connections, and in South Korean stock traders who go all in on tech stocks with several times leverage.
The gambling instinct is so deeply rooted in human nature that it cannot be completely suppressed by bans alone; but if we leave it completely unregulated, we are indulging the most irrational side of human nature.
Therefore, there is always a tension in such policies: we need to provide a legal outlet for the demand, while controlling its intensity as much as possible.
The idea of using "high-frequency fast-draw" to fight against private lotteries in 2005 follows this logic, and the idea of using scratch-off lotteries to replace high-frequency fast-draw lotteries in 2020 is still the same.
In all aspects, scratch-off lotteries are equivalent to a less toxic version of "high-frequency fast-draw" lotteries.
It does not have continuous draws, so it is hard for players to get overly agitated; there is no "multiple bets and number chasing" mechanism, so there is no such mindset as "double the bet to win back losses"; each ticket costs at most dozens of yuan, and the game ends as soon as you finish scraping, so its addiction risk is lower.
However, the problem is that as long as people are still human, the impulse to seek huge profits with small stakes will never disappear.
Even with a low addiction rate, there are still people who take online loans to buy scratch-off lotteries, and there are also people who scrape the tickets until their fingers are worn out.
References:
Annual sales exceed 60 billion yuan: Multiple gameplay modes of scratch-off lotteries, Future Editorial Department · Micro China
Welfare Lottery Scratch-off: The never-ending story, the unwavering original intention, China Welfare Lottery Official Website
Composition and proportion of lottery funds, China Welfare Lottery Official Website
High-frequency/Fast-draw games: Hidden risks behind the booming performance, Sina Lottery
Notice of the Ministry of Finance, the Ministry of Civil Affairs and the General Administration of Sport on Matters Concerning the Orderly Withdrawal of High-frequency Fast-draw Lottery Games, Ministry of Finance Official Website
Experts say the justice of lottery is the key to dealing with problematic lottery players, Xinmin Weekly
30 years of Sports Lottery: 230,000 stores, 320,000 practitioners, annual sales of 400 billion yuan, Economic Observer
Record high! Annual national lottery sales in China exceed 600 billion yuan, Shanghai Observer
Young people make money by selling scratch-off lotteries: Office workers earn over 10,000 yuan a day by setting up stalls on weekends, post-00s open lottery stores after failing civil service exams, Times Finance
Fast draws and high prize return rate: Guangdong's "11 Choose 5" becomes a sharp tool to crack down on private lotteries, China Sports Lottery Official Website
Welfare Lottery 3D lands in Guangdong: The government should not go astray in fighting private lotteries, Southern Metropolis Daily
Scratch-off lottery: The first financial management lesson for young people, Yu