The explosion occurred Monday afternoon on a remote mountain slope at Laoshan village in Guizhou province, Xinhua News Agency reported.
At least eight more people were injured, all reported in stable condition.
Police said an initial investigation showed the victims had gathered at the site to gamble.
Those arrested include three who surrendered, the news agency said.
The cause of the blast was being investigated by local police and a team from the Chinese Ministry of Public Security.