A company in Sanya, Hainan Province, which drew worldwide attention from investors after it was reported to be running a cashless casino, the first of its kind in China, denied the claims on Tuesday, saying that it was just an ordinary bar.

"We know that gambling is forbidden in China, so what we have in the resort is just a bar with drinks and other entertainment," said a media officer surnamed Wang from the Antaeus Group, reported to be behind the cashless casino in the Mangrove Tree Resort World, the company's newly opened resort hotel in Sanya.

Wang told the Global Times the bar had merely adopted the decoration and service style of a casino, which has become popular with many consumers. "There is no gambling here."

However, according to a report by Reuters on Sunday, the Jesters casino bar, located at the resort hotel in Sanya Bay, allowed players to win chips that could be used in the resort to pay for hotel accommodation and luxury goods.

Zhang Baoquan, chairman of the Antaeus Group, said the government has allowed a casino bar to go into operation on a trial basis for the first time and it is possible that gambling will be legalized in the future.

His comments were at odds with those made by the director of the Sanya bureau of culture and sports.

"The government has never allowed such an activity. A group has been formed to investigate the hotel and the bar has been temporarily closed," the director told China News Service on Monday.

A property developer and close friend of Zhang Baoquan, speaking on condition of anonymity, told the Global Times that Zhang started to develop the idea of opening a casino bar in 2010, after the State Council released a document to promote tourism in Hainan.

The document said that sports lotteries, instant lotteries and betting on large scale international sports competitions could be explored in Hainan.

In 2009, some 56 members of the Hainan Provincial Committee of the Chinese People's Political Consultative Conference proposed limited lifting of restrictions on gambling.

This will help reduce the underground gambling business that has prevailed in Hainan for a long time, resulting in large amounts of money flowing to other illegal businesses or overseas markets, said the proposal.

However, Wang Xuehong, researcher at the Research Institute for Fiscal Science of the Ministry of Finance, told the Global Times that gaming is not completely forbidden in China.

"The government will decide whether to relax wider gaming based on the market development and civil demand," Wang said on Monday.