Abstract: In China, lottery is a business launched in the name of charity to raise funds from the public across the country. Whether the social welfare effect is positive or negative is a fundamental issue deciding the sustainable development of the lottery business. By analyzing the competitive patterns, means and effects of the lottery business, it is found that the market competition of the lottery business does not reduce the issuing cost, nor bring any positive improvement to the social welfare. On the contrary, this business has created a new vested interest group and a puny group. Therefore, the financial departments should pay close attention to these problems and try to solve them by formulating regulations and strengthening supervision.

Key words: lottery industry; market competition; economic consequence