"Prison bosses made more money forcing inmates to play games than they do forcing people to do manual labor," he said.
"There were 300 prisoners forced to play games. We worked 12-hour shifts in the camp. I heard them say they could earn 5000-6000rmb a day.
"We didn't see any of the money. The computers were never turned off."
Dali -- not his real name -- is aged 54 and was sent to Jixi re-education camp in Heilongjiang province in northeast China, in 2004.
He said he would spend his days either breaking rocks or assembling car seat covers and his nights playing computer games.
Dali said that if he didn't complete his credit quota, the guards would punish him: "They would beat me with plastic pipes. We kept playing until we could barely see things."
The building up and trading of game credits is known as gold farming. Millions of gamers around the world pay real money for the credits in order to save hours of playing time.
Gold farming is rampant in China and other developing nations. Many Chinese gamers have full-time jobs as gold farmers but The Guardian story highlights the first time it has been practiced in labor camps.
Quoting figures from the China Internet Center, the paper says almost £1.2 billion ($1.65 billion) worth of virtual currencies was traded in China in 2008.