Story of Previous Birth of Demon King Bali

In the ancient age, there was a gambler who was a committed atheist and womanizer. Once he won lots of money by cheating in gambling. To celebrate this he drank a lot of liquor. He wanted the company of his favorite prostitute. He purchased some exotic flowers, beautiful garlands, perfume and incense sticks, etc. He then went to the prostitute with all the money he won to impress and enjoy her.  

On the way, he stumbled and fell on the road and lost his senses for some time. During that senselessness, something changed inside him due to some good deeds performed by him in his previous birth. After getting back to sense, pure and divine thoughts started coming into his mind and he offered the flowers and other things to Lord Shiva with pure devotion. 

After some time he died and was taken to the darbar of the god of death Yamraj where he was explained by the minister Chitragupta that he had performed only one good deed i.e offering flowers and other things to Lord Shiva with a pure heart and sinned a lot in his last life. He was given a chance to choose between the result of the good deed and the punishment for bad deeds to accept first and he preferred to enjoy the result of the good deed first. So Yamraj allowed him to become the king of heaven for three hours for the good deed and invited Devguru Brihaspati to take him to heaven to fulfill the reward. Devguru took him to heaven and asked Indradev to relinquish the throne and let the gambler be the king of heaven for three hours. Indradev reluctantly left the throne for the gambler and went away. 

After becoming the king of heaven the gambler started donating the wealth of heaven. He donated Indra's elephant Airavat to Maharishi Agastya, horse Uchaishrava to Maharshi Vishwamitra, cow Kamdhenu to Maharshi Vashishta, gem Chintamani to Maharshi Galab, tree Kalpabriksh to Maharshi Koundinya and many other things to other Rishis. For the entire three hours, the gambler kept donating the wealth of heaven. 

After completion of three hours, he left heaven and Indradev took over the throne of heaven. In due time the gambler was reborn as the son of Virochan the king of demons and Suruchi and in this birth, he was known as Bali. Virochan was the son of Prahallad, the great devotee of Lord Narayan.  It's said that when Bali was in the womb of Suruchi, Indradev came to Virochan in the disguise of a brahmin to kill him. He asked for a donation from the demon king. Virochan promised Indra to fulfill his wish at any cost. Indradev cunningly begged his head and the demon king happily severed his head and donated it to Indra in disguise. Bali became a great king of demons.

Source: Skand Purana