$3bn of China's lottery 'misused'

Most gambling is illegal in China but government-run lotteries are popular

Investigators have found that a quarter of all money raised through China's state-run lottery programme in a two-year period was misused.

Nearly $3bn (£1.9bn) was embezzled or spent on cars, travel and new offices.

The corruption was discovered after the first-ever widespread audit of the lottery. Some of the embezzled money has now been recovered.

Gambling is illegal in China, apart from a few exceptions, including the lottery.

The state auditor's investigation looked at the use of lottery funds between 2012 and 2014 and spanned 18 provinces.

The worst abuses found included 32 lottery shops that spent $500m (£320m) on building training centres and hotels.

The report did not specify whether any officials had been punished for the abuses, saying only that some were "blamed".

Although authorities have reclaimed some of the money, the allegations are likely to shake public confidence in the state-run lottery, the BBC's Martin Patience reports from Beijing.

The lottery is hugely popular with the country's growing middle class and has brought in revenues of around 2 trillion yuan ($320bn; £200bn) since launching in 1987, according to official media.

China is expected to overtake the US next year as the world's largest lottery market.

Casinos and other forms of gambling are banned on the mainland but government-run lotteries or those in which proceeds are donated to charity are legal and popular.

The audit's revelations come amid a high-profile campaign against corruption by President Xi Jinping's government.