Analysis of Situations Where Video Games (Practitioners) May Constitute the Crime of Operating a Casino
An analysis of how video game mechanics like paid random draws, prize predictions, and chess-like gameplay may constitute operating a casino under Chinese criminal law.
Recently, news about a well-known live streaming platform CEO being missing for days fermented on the internet, finally coming to light on November 22, 2023.
Chen Moujie was arrested by Chengdu police on suspicion of operating a casino.
The specific details of this case cannot be discussed in this article as the police have not officially released information, but the case can serve as a starting point for discussion:
- What is the “crime of operating a casino”?
- What are the conviction and sentencing standards for the “crime of operating a casino”?
- Under what circumstances may games and game companies (personnel) constitute the “crime of operating a casino”?
- Once the crime is constituted, which employees may bear criminal liability?
This article represents only the author’s personal views and should not be considered legal advice or opinion.
I. What is the “Crime of Operating a Casino”?
According to Article 303 of the Criminal Law of the People’s Republic of China:
For the purpose of profit, gathering people for gambling or making gambling one’s profession shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and a fine. Operating a casino shall be sentenced to fixed-term imprisonment of not more than five years, criminal detention, or public surveillance, and a fine; if the circumstances are serious, the sentence shall be fixed-term imprisonment of not less than five years but not more than ten years, and a fine. Organizing citizens of the People’s Republic of China to participate in gambling abroad, if the amount is huge or there are other serious circumstances, shall be punished in accordance with the provisions of the preceding paragraph. Criminal Law of the People’s Republic of China
According to Articles 2 and 4 of the Interpretation of the Supreme People’s Court and the Supreme People’s Procuratorate on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases (Fa Shi [2005] No. 3):
For the purpose of profit, establishing a gambling website on a computer network, or acting as an agent for a gambling website to accept bets, constitutes “operating a casino” as stipulated in Article 303 of the Criminal Law. Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases Article 2 Knowingly providing direct assistance such as funds, computer networks, communications, or fee settlement to others engaged in criminal gambling activities shall be punished as an accomplice to the crime of gambling. Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases Article 4
The “crime of operating a casino” refers to the organized establishment of a gambling venue by a criminal party for the purpose of illegal profit, carrying out activities to accommodate gamblers for gambling.
Establishing gambling websites on computer networks, acting as an agent for gambling websites (guiding gamblers to relevant websites, advertising for gambling websites, accepting indirect bets, etc.) all constitute this crime. At the same time, providing direct assistance to others’ gambling activities shall be punished as an accomplice to the crime of gambling.
For相关人员 in game enterprises, to be determined as committing the “crime of operating a casino,” the game content or the website under the company’s jurisdiction usually needs to be认定的 as having a “casino” nature, or the game needs to be认定的 as capable of引流 to other illegal gambling websites.
If a game provides functions that facilitate gambling, and the operator knowingly allows users to engage in gambling activities using such functions without management, it may be认定的 as the “crime of gambling.”
II. What Are the Conviction and Sentencing Standards for the “Crime of Operating a Casino”?
According to the Opinions on Several Issues Concerning the Application of Law in Handling Online Gambling Criminal Cases issued by the Supreme People’s Court, the Supreme People’s Procuratorate, and the Ministry of Public Security:
The conviction standards for the crime of online casino operation are: Using the internet, mobile communication terminals, etc. to transmit gambling videos, data, and organize gambling activities, having any of the following circumstances constitutes “operating a casino” as stipulated in Article 303, Paragraph 2 of the Criminal Law: (I) Establishing a gambling website and accepting bets; (II) Establishing a gambling website and providing it to others for organizing gambling; (III) Acting as an agent for a gambling website and accepting bets; (IV) Participating in the profit sharing of a gambling website.
The sentencing standards are:
Having any of the following circumstances in committing the acts specified in the preceding paragraph shall be认定的 as “serious circumstances” under Article 303, Paragraph 2 of the Criminal Law: (I) The cumulative amount of抽头渔利 reaches 30,000 yuan or more; (II) The cumulative amount of gambling funds reaches 300,000 yuan or more; (III) The cumulative number of gamblers reaches 120 persons or more; (IV) After establishing a gambling website, providing it to others for organizing gambling, with illegal gains of 30,000 yuan or more; (V) Participating in profit sharing of a gambling website, with illegal gains of 30,000 yuan or more; (VI) Recruiting下级 agents for a gambling website, with the下级 agents accepting bets; (VII) Soliciting minors to participate in online gambling; (VIII) Other circumstances of serious nature.
The “crime of operating a casino” is a “conduct crime.” As long as the conduct认定的 as “operating a casino” is carried out, the crime is established, regardless of whether a “profit” has been made, which does not affect the conviction.
Conduct crime: A conduct crime refers to a crime where the law focuses only on the criminal act itself, without considering its consequences. This means the key to establishing a crime lies in whether there is an illegal act, without necessarily requiring actual harm or damage to occur.
At the same time, the sentencing standard can be considered “very low” for an ordinary game, especially when minors participate in game content, gameplay, or activities suspected of constituting “gambling,” directly constituting “serious circumstances,” with a maximum sentence of ten years.
III. Under What Circumstances May Games and Game Companies (Personnel) Constitute the “Crime of Operating a Casino”?
1. Legal Definition
In the Notice on Regulating the Order of Online Game Operations and Investigating and Banning Gambling Using Online Games issued by the Ministry of Public Security, the Ministry of Information Industry, the Ministry of Culture, and the General Administration of Press and Publication, acts of “using online games for gambling” were simply enumerated:
III. Regulate the business conduct of the online game industry. Supervise online game service units to carry out business activities in accordance with the law, requiring them to not charge or indirectly charge commissions related to game wins or losses in the form of ‘virtual currency’ or otherwise; for games that use game积分 for betting, competitions, etc., set limits on user game积分 wins and losses per round and per day, not provide services for trading or兑换 game积分 or indirectly兑换 cash or property in the form of ‘virtual currency’ or otherwise, not provide services for game积分 transfer between users such as gifting or assignment, strictly manage, and prevent facilitating online gambling activities.
V. Crack down on gambling activities using online games in accordance with the law. Public security authorities shall strengthen investigation and crackdown on online gambling using online games, timely conduct evidence collection and handling. Focus on cracking down on online gambling activities such as setting up online gambling tables, acting as the banker to ‘抽水’ using online games. For those who, for the purpose of profit, provide online gambling venues, gambling tools, and便利 conditions for trading and兑换 gambling chips with cash for online gambling activities, shall be severely investigated and punished in accordance with the law.
If the legal definitions seem unclear, the author provides some simple examples for illustration:
2. Example Explanations
Gameplay One: “PK” Tournaments
If a game designs competitive or non-competitive matches between players and sets rewards such as diamonds or gold ingots that can only be obtained through充值 (collectively referred to as “充值 virtual currency”) or items that can only be purchased with such virtual currency for the winner, players cannot be required to pay充值 virtual currency as an entry fee to participate in the match, unless the virtual currency obtained is paid in full to the winner.
However, although the regulations say so, considering that “match-fixing” and “account selling” are difficult to control and may constitute “virtual currency” transfer, the author suggests that completely not charging充值 virtual currency as entry fees might be a better solution.
Gameplay Two: Prize Prediction
The author has discussed this content before, please see: The World Cup is About to Start, Has Your Game Properly Capitalized on the Buzz?
During major international events, many games or platforms like to organize “event result prediction” activities to “hijack traffic.”
In such activities, it is necessary to avoid designing predictions that use充值 virtual currency. If using event-specific积分 or tokens for predictions, it is necessary to set daily and per-round participation caps, not allow积分 trading between users, and ensure that积分 cannot be exchanged for virtual currency,法定货币, or physical rewards (can be exchanged for in-game items).
Strictly speaking, many graphics card vendors’ “predict the winner and win a graphics card” activities during the last World Cup may have been legally questionable.
The same principle applies to players participating in competition result predictions in Gameplay One above.
Gameplay Three: Chess or Chess-like Gameplay Activities
Currently, ISBN approval for chess and card games is nearly “extinct,” but some games may want to design chess-like gameplay activities for “traffic引流” or to increase activity participation.
Considering current ISBN management and criminal risks, these activities should follow the following guidelines:
- Cannot be set as permanent gameplay and should not last too long (it would change the nature of the game and risk ISBN cancellation);
- Cannot set entry fees, cannot take commissions, cannot trade积分, cannot exchange for virtual currency/cash/physical items (no need to repeat);
- Random matching (to avoid providing gambling conditions); a safer approach is to make it “anonymous”;
- Limit the number of plays per day.
Prohibit providing Texas Hold’em or other gameplay that has been clearly defined as “gambling.”
Gameplay Four: Gameplay Involving Inputting充值 Virtual Currency with Random Results Increasing the Virtual Currency
This is a broad category, difficult to specify a particular gameplay. Similar examples might be the “fishing” gameplay from years ago.
By inputting充值 virtual currency to participate in the game, each game result is random (unrelated to the player’s个人 ability, competitive skill, intelligence, etc.), and winning rewards the player with virtual currency.
Such activities present very clear criminal risks, and the author does not recommend designing such gameplay.
Gameplay Five: Tying to Real-World Random Content Results
For example, inputting充值 virtual currency, where the winning result matches the current welfare lottery results, and the winner is rewarded with in-game items, etc.
For this type of gameplay, regardless of whether the final prize is充值 virtual currency or just in-game items, it presents relatively obvious risks and is not recommended.
Gameplay Six: Providing Room Functions with Chat Functions (or Similar) Featuring Random Results
Common examples include group chats with “dice” or “card drawing” gameplay, which may constitute providing a “gambling” environment.
Private chats are the same.
Gameplay Seven: Providing Lottery-like Gameplay
That is: inputting 充值 virtual currency to purchase one or more lottery tickets, drawing at a specific time, and receiving certain rewards based on the results (whether充值 virtual currency or ordinary in-game items).
This type of gameplay may constitute “issuing and selling lottery tickets without state approval.”
3. Summary
To summarize simply, the most basic principle is to avoid inputting充值 virtual currency and producing virtual充值 currency, isolating 充值 virtual currency from all “probability-based” gameplay.
At the same time, in-game chat management needs to be strengthened to prevent becoming a tool for criminals to引流.
IV. Once the Crime Is Constituted, Which Employees May Bear Criminal Liability?
The subject of the “crime of operating a casino” can only be an individual; games and game companies themselves cannot constitute this crime (but may be认定的 as “casinos”).
Chen Moujie’s arrest has clearly indicated that company leaders will generally bear criminal liability.
As for other personnel who may bear criminal liability, we can understand through an actual criminal judgment:
(2019) Xin 0203 Xing Chu No. 170 — Tian Tian, Wang Yajun, etc. First Instance Criminal Judgment for Operating a Casino
In this case, the game involved, “Big Xinjiang Mahjong,” was认定的 as “providing便利 for gambling” (due to space constraints, this article will not discuss the specific case details; interested readers can find the judgment themselves). A total of fifteen people were prosecuted and sentenced, including eleven game company employees, all found guilty of “operating a casino” in the first instance, with the comprehensive认定 of illegal gains at 1.2 million yuan.
The positions of the game company personnel were:
| Person | Position | First Instance Sentence |
|---|---|---|
| Tian X | Legal Representative | Four years and six months |
| Wang X Jun | Company Manager, Technical Director | Four years |
| Ni X | Operations Director, Game Department Head, responsible for platform promotion and providing operational suggestions to technical staff | Three years |
| He X Jun | Operations Director, Game Department Head, managing customer service work and website promotion | Two years and six months |
| Cui X Bin | Technician (Programming), responsible for programs, game rules, Mahjong gameplay creation, developing task modules, in-game functions, handling player complaints | Two years |
| Liu X Bin | Technician (Programming), Lead Frontend Programmer | One year and eight months |
| Chen X | Technician (Programming), Frontend Program Development and Maintenance | One year, suspended for two years |
| Wei X | Technician (Programming), responsible for game copywriting and testing | One year, suspended for two years |
| Lei X | Customer Service, responsible for answering customer questions and handling complaints, etc. | One year, suspended for one year |
| Sang X Bao | Customer Service, responsible for selling room cards, answering questions, handling complaints, and封停 complained players based on player complaints and management requirements | One year, suspended for one year |
| Li X | Lead Game Designer and Project Team Manager | One year, suspended for one year |
From the table, it can be seen that from company leaders to managers, programmers, designers, and even customer service staff, all may bear criminal liability.
It is worth noting that the judgment in this case was made in 2019, and the Criminal Law Amendment (XI), effective from March 1, 2021, amended Article 303 of the Criminal Law, raising the maximum statutory sentence for the first tier of “casino operation crime” from the original three years to five years.
Therefore, for similar cases involving actual imprisonment, if sentenced now, the sentences would increase by one to two years or more.
V. Summary
The Chen Moujie case is not just “water cooler” conversation fodder; it is a wake-up call for every internet industry practitioner.
This case reminds us that many behaviors that might have been considered not illegal, even those seemingly “done for years,” may in fact be illegal or even criminal. In the rapidly developing internet industry, regulations are constantly evolving, and compliance awareness is crucial. We cannot ignore legal constraints because of past practices; instead, we should始终保持 sensitivity to regulations and high vigilance for compliance.
As internet industry practitioners, we should take Chen Moujie’s case as a warning, focusing not only on business development but also on acting cautiously within the legal framework. Only by adhering to regulations can we truly achieve sustainable business development and contribute to the healthy development of the internet industry. Let us work together, building on the foundation of compliance, to create a clean and fair internet environment.
