It will only make matters worse.
The more you restrict people from doing something, the more that they will do things in order to just get their fill of it. Just take a look at lockdowns during the pandemic. Most people hated being restricted within the confines of their homes, hence some of them are breaking quarantine restrictions in order to just go outside and do what they normally do. This can be the same with gambling, and with that strict of a regulation, people will seek underground gambling platforms in order to just play, or to get their fill of gambling.
Indeed. In my country, for example, gambling is forbidden, but it doesn't prevent lots of people from betting. They just go to illegal houses or virtual casinos instead of the old legal physical casinos we had before the law passed. When the industry was considered legit, there were many people who legally worked in casinos and now these people are unemployed or have to work in the shadows of clandestinity.
Also, morality comes second to the government, especially if they are gaining a lot from the industry. They are earning billions from gambling alone, so why would they restrict it or put some heavy regulations about it?
In some countries restrictions happen for religious reasons, but in China's case I think it's more like a strategy to not let the population fall for addictions of any kinds (as even children are being prevented from playing videogames accordingly to OP). Addictions make people weaker, less productive, so chinese government wants to avoid that, just like they did with opium dens back in 1950's, when they totally erradicated the production and usage of opium.