How to Avoid Online Game’s Risk of Gambling in China?

: Zhengtu is a online game operated by Giant China

In recent, the report of the online game gambling in some regions in China again hits the headline of the newspaper, and accordingly, the Ministry of Culture of China (MOC), the department supervising and managing the operation of online game, issued the notice (note: the link is in Chinese), demanding a new round of special examination on the online broad game in this May to June.

Actually, this is not the first time we have seen the special notice by MOC on the online gambling. Before that, MOC has respectively with the Ministry of Public Security and the Ministry of Commerce publicized Notices on the Regulation of Online Games Operation Order and Prohibit Gambling in Online Games (the “Notice I”) and Notices on Reinforced Management on Virtual Currency in Online Game (the “Notice II”). Basing on these notices, MOC afterwards promulgated the Interim Measures on the Online Game Management (the “Management Measures”) in June of 2010.

Our website previously analyzed the reason to differentiate the virtual currency (or the in-game currency) with the game coin, and today we would like to share our opinions on the game design and operation to avoid the administrative punishment for the gambling in game.

I.What is the gambling in online game?

Until now, we could see no direct and specific definition of “gambling in game” as provided in Chinese laws. But the Notice II and the Management Measures has regulated the related articles:

Article 20 in the Notice II: “The online game operation company shall not distribute the in-game goods or virtual currency through drawing lots, betting or random drawing or in other accidental ways when the user has invested cash or virtual currency in the game”.

Paragraph 3 of Article 18 in the Management Measures: “it shall not lead or induce the online game users with the accidental ways like random drawing to invest the legal currency or virtual currency in online game for the acquisition of the in-game goods or services.”

To conclude the above regulation, we could find that the key facture constituting the “gambling in game” is the “to invest cash and virtual currency” and “the acquisition of the in-game goods and service through accidental ways”. Moreover, the Notice I has set limitation on the conveniences contributing to the gambling in game:

Article 3 in the Notice I: “…a limitation of game credit win-lose amount in each round or each gaming day shall be set when it allows credit betting or quiz in the game; no service of game credit transaction, exchange or exchange transaction with the cash or other real property shall be provided; no service of game credit transfer like gift or forwarding shall be provided; and the management on the game shall be reinforced for any conveniences to the gambling in game.”

Regarding the difference of the virtual currency mentioned aforesaid with the game coin, you may click here to read our past post on it.

II. Risk alert on common gambling in online game

The common gambling we could see in the online game, in addition to the drawing lots, betting, random drawing or other accidental ways, also involves the following methods, and except the box opening is explicitly prohibited in the law, all the rest are the so-called touch ball in law:

1. Box opening

Under this game mode, the player could get one or several boxes after the mission completion in the game. In the boxes, there may be awards or nothing instead, but the answer could only be found when the boxes are open by the keys, which shall be purchased by the players with cash or virtual currency. This mode is obviously against the legal regulation, and no doubt it’s prohibited in law.

2. Commission

The so-called commission in game is in fact the percentage deduction from the award got by the players in the game. For the aforesaid notices and measures, the commission now could not be conducted on the virtual currency, and now mainly focuses on the game coin instead. Although we have analyzed that the game coin is only the reward in game and normally of no property, such non-property nature is actually not absolute. Currently not some game coins are distributed when the purchase of virtual currency. Despite in such situation, the game coins are also paid for different purposes from that of the virtual currency, but for its origin then is the same as that of the virtual currency, there could chances to determine the game coin with the nature of property. So far, we have noticed that some game platforms are complained of such game mode, and are criticized of the gambling risk.

Therefore, the online game company shall ensure the game coins are coming from the mission completion or the free distribution from the company rather than the direct or indirect purchase through cash to avoid the legal risk concerning the commission.

3. Participation fee or entry fee

Currently in addition to the game point, the payment of game coin as the participation fee is also demanded in some games. In reality, the participation fee in like the entry fee which shall be approved by the commodity price department before its collection, and any unapproved fee collection shall be illegal.

For this reason, the legality of the participation fee is relying on the judgment of property nature of the game coin. Also the same, when the game coin is of no such nature, namely it is not purchased by the virtual currency in direct or indirect way, the game mode is feasible within the existing legal frame.

4. Win-lose of the game coin

The legal risk of win-lose of game coin in this mode is also a problem of property determination. Once the nature could be decided, it will naturally be kind of gambling. Consequently, the key to the legal operation of this mode is to ensure the origin of the game coin from non-cash-investment way.

5. Game reward and lottery

The reward in game is aiming at the promotion of the game, but it shall be attentive that the distribution way of the reward shall be explicit and ascertain in the operation, that means the game company shall draft and publicized the standard and procedure of the reward earning. And as to the condition of the reward wining, it could only be measured by the score in game rather than the cash or virtual currency investment.

For the lottery in game, it has been explicitly regulated in Notice II that the online game operation company shall not distribute the in-game goods or virtual currency through drawing lots, betting or random drawing or in other accidental ways when the user has invested cash or virtual currency in the game. So it shall avoid the consumption of virtual currency or cash when carrying out the lottery, and the more feasible and legal solution is to cost of EXP or free got game coin in the game lottery.

Moreover, for the game reward and lottery, according to the Anti-unfair Competition Law of PRC, the maximum amount of the reward shall no more than 5, 000 yuan, and that shall be followed by the game company when launching the promotion activity.

These are our opinions to prevent the gambling in online game, yet they are just the sketchy programs. As to the specific legal risk and proper countermeasures to avoid such risk, they shall be evaluated and designed according to each case. Surely, we believe with the professional guidance and advice, the operation program could both guarantee the excellence of the game and the profits of the operating company.

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