Police chief Fayyaz Leghari said the club was operating upfront as a bridge club but the owners ran an illegal rummy club that was frequented by some very influential people.
Leghari told mediapersons that 16 people had been killed in the incident in which armed men raided the club and threw hand grenades and other explosive material causing extensive damage and causalities.
"The condition of 15 of the injured is pretty precarious," a doctor at the Jinnah hospital said. "In the past infact last September police raided the club but the owners went to the court and got relief," Leghari said.
He said investigations were being carried out to find out if the assailants had planted a bomb near the club or attacked it with hand grenades.
Geo News reported the club was operating under the patronage of some underworld elements as well. Television channels showed footage of a deep crate inside the club caused by the explosion, broken bottles and damaged pillars.
The club was located inside the parking area of a residential building. Security forces cordoned off the area shortly after the blast, which was heard from several kilometres away.
Footage on television showed the injured, many with bloodstained clothes, being taken into the civil hospital.
Bloodstains and discarded footwear lay scattered at the site of the blast. The explosion caused a crater and many of the injured were hit by splinters. Hundreds of people were present in the gambling den at the time of the blast.
No group claimed responsibility for the attack. Officials of the bomb disposal squad dismissed an earlier report that the blast was caused by a grenade.
They said evidence indicated that a planted bomb was used in the attack.
Image: Plain-clothed police officials survey the site of the explosion in Karachi on Thursday
Photograph: Akhtar Soomro
Top Al Qaeda man held in Pak
Who is the biggest threat to Pakistan's security?
Pak propaganda at its best in Waziristan
New Afghan-Pak deal may upset India
Peshawar hotel blast toll rises to 16