One was a modest civil servant who didn't drink or socialise and the other the boss of a private company who made her fortune in scrap metal in the ship-building city of Dalian. What the two did have in common: both lost a fortune in foreign casinos and have become models of what not to do, as the public and government confront the cost of an obsession which has gripped Chinese throughout history - gambling. Scholars estimate that Chinese spent US$72 billion in foreign casinos last year, an increase of 50 per cent from the US$48 billion in 1997, thanks to the rise in individual incomes and increasing ease of foreign travel. That colossal sum is more than twice the nation's education budget last year and is despite strict controls on the movement of foreign currency out of the mainland, with each individual restricted to US$5,000. This means that gamblers have to take out money illegally, deposit it in foreign banks, borrow it from friends and relatives or under-report earnings abroad and keep the balance offshore. Gambling has become a major sector of the economy, with investors setting up 200 casinos in neighbouring countries to satisfy the demand, while existing establishments in Macau, South Korea, the Philippines, Australia, the US and even Monaco have established offices and departments dedicated to the China market, staffed with Putonghua- and Cantonese-speaking staff who arrange visas, air tickets and accommodation. Even the strict Singapore government is considering setting up a casino. Aware of the social evils of gambling, the governments of many of these countries, including Vietnam and North Korea, ban their own citizens from entering the casinos, which exist largely to cater to Chinese. The investors also are often Chinese, leaving the local government to benefit through tax revenue, jobs and other spending by the visitors. The cases of the civil servant and the businesswoman are typical of the losses China is suffering. Between April and November last year, Cai Haowen, 41, a department chief in the transport bureau of Yanbian county, in the northeast province of Jilin, made 27 visits to a casino on the east coast of North Korea, run by the Emperor Group of Hong Kong. During that time, he lost seven million yuan, half of it in public money and half borrowed from relatives. In November, he went on the run but on February 6 was arrested on a train travelling from Beijing to Harbin and formally charged on February 21. Colleagues described Cai as a modest man who didn't drink and rarely went out. After promotion to the post of chief in January last year, he went to the casino for amusement and initially won money. Then he started to lose and could not stop himself from going again to try to make up his losses. The case of the businesswoman was even more serious. During 10 months in 2001, she lost US$20 million at the gambling tables of Las Vegas and ran up debts so serious that she is unable to return to the US. These stories provoke anger among the mainland public, with an average annual urban income of less than 9,000 yuan per capita, especially towards officials such as Cai who gamble money that belongs to the public. The problem is so serious the top official in the Communist Party's disciplinary commission announced last November that any party member who went abroad to gamble would be dismissed from the party. The dilemma facing the leaders in Beijing is the same as that confronting every emperor since the first recorded gambling in China, playing dice in 3,000BC: how to regulate a habit that is part of the national psyche. Do you legalise it and take a profit or outlaw it to protect individuals and families from the ruin it can cause? Emperors in the Tang and Song dynasties (618-1279) tolerated gambling. Zhu Yuanzhang, the first emperor of the Ming dynasty who reigned between 1368-1398, was a bitter opponent, ordering gamblers to have their hands cut off. He put the most serious offenders into a room without food and water, to give them time to reflect on their addiction while they starved to death. In the late Qing dynasty during the latter half of the 19th century, in the face of a rampant increase in gambling, the government lifted the ban and made many forms legal to raise revenue. After the Republic of China was founded in 1911, the new government re-introduced the ban but, as its control over the country diminished, it couldn't enforce it. In Shanghai, capital of vice, in a night of fever, a man could the gambling table lose his house, business - and wife. In their turn, when the communists took power in 1949, they brought back the ban and implemented it with more rigour and severity. This worked well in the Maoist era when people lived collective lives, under the scrutiny of their neighbours, and had little spare money. They gambled at home as a recreation, but the sums involved were modest. But things have changed over the past 20 years, as incomes rose, social controls diminished and people lived away from the family home and local street committee. Gambling, including cards, mahjong, and football betting, has again taken hold. The social and economic cost became so heavy that, at the end of last year, the government decided to act. The Ministry of Public Security launched a campaign against gambling on January 11. Wu Mingshan, the officer in charge, said police each year arrested 1.3 million people involved in gambling but that this was the tip of the iceberg. 'The number of people opening and attending casinos and of participants is going up and the sums involved are increasing. Betting of tens of millions of yuan is not unusual.' Internet gambling has spread to more than 20 provinces, with improved technology making payment by credit card or bank transfer easier. The ministry announced that, for the first time, it had taken its campaign outside the borders, aiming at the nearly 200 casinos in neighbouring countries, run by Chinese for Chinese. Within a week, the police said that it had forced the closure of 84 of these establishments in Myanmar, Laos and Vietnam, by cutting off banking services to the Chinese who ran them and vetting more strictly the people crossing the border to gamble in them. The campaign is bad news for casinos close to China, including those in Russia, Mongolia and North Korea, because police can more easily target their customers and their investors. But it's harder to influence casinos far from the border that target Chinese who travel easily and keep substantial assets offshore, such as Ye Lipei, a Shanghai property developer worth US$540 million last year, making him the ninth-richest man in the country, according to EuromoneyChina. In June 2003, a federal court in Australia heard that Mr Ye had wagered A$122 million ($745 million) during 19 visits to the Crown Casino in Melbourne. His nephew told the court that he and his uncle had provided foreign exchange to other Chinese gamblers to the casino, one of whom had wagered A$80 million and lost it all. Mr Ye, an Australian citizen who owns a house in Sydney had sued the casino for alleged misappropriation of his gambling funds. He lost the case. It's these high-rollers whom the big foreign casinos want to attract. Those who want to hide their identity feel more secure in these foreign establishments, which cater to a wide range of nationalities and where the Chinese security services can operate less easily. China is an important market for major operators in the US, who are seeing stagnating demand from Japan, Taiwan and Thailand. Some have set up offices in China to provide personalised services to clients. They describe the characteristics of Chinese gamblers as betting large amounts, intensely concentrated and some able to play without stopping for three days and nights, eating only instant food and not leaving their seats.