Alibaba Group Holding Ltd suspended online lottery sales on Saturday due to pressure from industry regulators.
The e-commerce giant cancelled sales on tabao.com and its mobile payment application Alipay, saying the abrupt halt was following orders from welfare and sport lottery administrators.
The two lottery watchdogs operate separately under the Ministry of Civil Affairs.
"We will redeem winning tickets already sold and clients who have pre-paid later rounds will get a refund in, at most, 5 working days,"said the official Weibo account of Tabao Lottery.
The General Administration of Sport said on Wednesday that it would crack down on illegal online sport lottery sales.
Another government document, co-signed by the Ministry of Finance, Ministry of Civil Affairs and the General Administration of Sport on Friday asked local lottery administrators to undergo self-examination and self-correction in online selling.
A number of provinces subsequently stopped accepting payments on the Internet, said a report from sina.com.
Stock in Ltd, China's largest online sport lottery purchasing platform listed in New York, slumped to its lowest in more than a year earlier this week due to China's tighter control over Web lottery sales.
The Internet lottery market is surging in China as smartphone payment services make betting easier.
Turnover of sport lotteries neared 175 billion yuan ($28 billion) last year, according to the General Administration of Sport.
China's sports lottery developed rapidly last year thanks to increased enthusiasm for international sports events such as the World Cup in Brazil and the growing popularity of online betting,
