Late last year, news about a well-known live streaming platform CEO being missing for days fermented online, eventually coming to light on November 22, 2023.

Chen Moujie was lawfully arrested by Chengdu police on suspicion of running a gambling establishment.

As the specific case details have not been officially announced by the police, this article will not discuss them. However, the case provides a basis for discussion:

What is the “crime of running a gambling establishment”?

What are the conviction and sentencing standards for the “crime of running a gambling establishment”?

Under what circumstances might games and game enterprises (personnel) constitute the “crime of running a gambling establishment”?

Once this 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 legal opinion.

I. What is the “Crime of Running a Gambling Establishment”?

According to Article 303 of the Criminal Law of the People’s Republic of China:

Whoever gathers a crowd to engage in gambling or makes gambling their profession for the purpose of profit shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and shall also be fined.

Whoever runs a gambling establishment shall be sentenced to fixed-term imprisonment of not more than five years, criminal detention, or public surveillance, and shall also be fined; if the circumstances are serious, they shall be sentenced to fixed-term imprisonment of not less than five years but not more than ten years, and shall also be fined.

Whoever organizes citizens of the People’s Republic of China to participate in gambling outside the country (territory), if the amount is huge or there are other serious circumstances, shall be punished in accordance with the preceding paragraph.

Criminal Law of the People’s Republic of China

According to Articles 2 and 4 of the Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases (Fa Shi [2005] No. 3) issued by the Supreme People’s Court and Supreme People’s Procuratorate:

Whoever establishes a gambling website on a computer network, or acts as an agent for a gambling website and accepts bets, for the purpose of profit, constitutes “running a gambling establishment” as stipulated in Article 303 of the Criminal Law.

Article 2 of the Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases

Whoever clearly knows that others are engaged in gambling criminal activities and provides direct assistance such as funds, computer networks, communications, or fee settlement shall be punished as an accomplice to the crime of gambling.

Article 4 of the Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Gambling Cases

The “crime of running a gambling establishment” refers to the organized establishment of gambling venues by criminal parties for the purpose of illegal profit, accommodating gamblers in gambling activities.

Establishing gambling websites on computer networks, acting as agents for gambling websites (directing gamblers to relevant websites, advertising for gambling websites, accepting indirect bets, etc.) all constitute this crime. Providing direct assistance to others’ gambling activities shall be punished as accomplices to the crime of gambling.

For game enterprise personnel, being found to have committed the “crime of running a gambling establishment” typically requires that the game content or the company’s website be deemed to have the nature of a “gambling establishment,” or that the game be deemed capable of引流 to other illegal gambling websites.

If games provide functions facilitating gambling, and the operator knows users are using such functions for gambling but fails to manage them, this may be deemed the “crime of gambling.”

II. What Are the Conviction and Sentencing Standards for the “Crime of Running a Gambling Establishment”?

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, Supreme People’s Procuratorate, and Ministry of Public Security

Conviction standards for online gambling establishments:

Using the internet, mobile communication terminals, etc. to transmit gambling videos and data, organizing gambling activities under any of the following circumstances constitutes “running a gambling establishment” as stipulated in Article 303, Paragraph 2 of the Criminal Law:

(1) Establishing a gambling website and accepting bets;

(2) Establishing a gambling website and providing it to others for organizing gambling;

(3) Acting as an agent for a gambling website and accepting bets;

(4) Participating in profit sharing from a gambling website.

Sentencing standards:

If any of the following circumstances exist, it shall be deemed as “serious circumstances” under Article 303, Paragraph 2 of the Criminal Law:

(1) The cumulative amount of commission collected reaches RMB 30,000 or more;

(2) The cumulative amount of gambling funds reaches RMB 300,000 or more;

(3) The cumulative number of gamblers reaches 120 or more;

(4) After establishing a gambling website and providing it to others for organizing gambling, the illegal income reaches RMB 30,000 or more;

(5) Participating in profit sharing from a gambling website with illegal income of RMB 30,000 or more;

(6) Recruiting lower-level agents for a gambling website, with lower-level agents accepting bets;

(7) Soliciting minors to participate in online gambling;

(8) Other circumstances where the circumstances are serious.

The “crime of running a gambling establishment” is a “behavioral crime.” As long as the act of “running a gambling establishment” has been committed, the crime is established, regardless of whether any “profit” has been made.

Behavioral crime: A behavioral crime refers to a crime where the law focuses only on the criminal act itself, not its consequences. This means the key to establishing the crime is whether the illegal act occurred, without necessarily requiring actual harm or damage.

At the same time, the sentencing threshold is “very low” for an ordinary game, especially when minors participate in game content, mechanics, or activities suspected of constituting “gambling,” directly constituting “serious circumstances,” with a maximum sentence of ten years.

III. Under What Circumstances Might Games and Game Enterprises (Personnel) Constitute the “Crime of Running a Gambling Establishment”?

1. Legal and Regulatory Definitions

In the Notice on Regulating the Operation of Online Games and Prohibiting the Use of Online Games for Gambling issued by the Ministry of Public Security, Ministry of Information Industry, Ministry of Culture, and General Administration of Press and Publication, the behavior of “using online games for gambling” is briefly enumerated:

III. Regulate the business conduct of the online game industry. Supervise online game service units to conduct business activities lawfully, requiring them not to charge or indirectly charge commissions related to game wins and losses in the form of “virtual currency” or otherwise; for games using game points to bet on wins and losses,竞猜, etc., set limits on the amount of game points players can win or lose per game and per day, and do not provide services for trading or exchanging game points or converting them into cash or property in the form of “virtual currency” or otherwise, and do not provide game point transfer services such as gifting or转让 between users; strictly manage to prevent facilitating online gambling activities.

V. Legally combat gambling activities using online games. Public security organs should strengthen investigation and crackdown on online game gambling, timely collect evidence and handle cases. Focus on cracking down on online gambling activities such as setting up online gambling games through online games, acting as the banker and taking “commission.” For those who, for profit, provide online gambling venues, gambling tools, and online gambling筹码 trading, cash exchange, and other便利 conditions for online gambling activities, strictly investigate and punish according to law.

If the legal definitions are somewhat unclear, the author provides some simple examples for illustration:

2. Illustrative Examples

Gameplay 1: “PK” Competition

If a game designs competitive or non-competitive matches between players and sets rewards such as diamonds or ingots that can only be obtained through充值 (hereinafter collectively referred to as “充值 virtual currency”), or items purchasable only with such virtual currency, the game cannot require players to pay充值 virtual currency as a participation fee unless the virtual currency obtained is fully paid to the winner.

However, although regulations stipulate this, considering the difficulty of controlling “fake matches” and “account selling,” which may constitute “virtual currency” transfer issues, it is recommended that【completely avoiding charging充值 virtual currency as entry fees】 may be the better solution.

Gameplay 2: Prize Guessing

The author has previously discussed this content; please see:

World Cup Kicks Off Soon, Has Your Game Capitalized on the Hype Correctly?

During major international tournaments, many games or platforms like to run “event result guessing” activities to “ride the wave of popularity.”

For such activities, it is necessary to avoid designing guessing using充值 virtual currency as much as possible. If using event-specific积分 or tokens for guessing, daily and per-session input limits should be set, user-to-user积分 trading should not be permitted, and积分 should not be convertible to virtual currency, legal tender, or physical rewards (in-game道具 may be allowed).

Strictly speaking, many graphics card vendors’ “guess the result and win a graphics card” promotions during the last World Cup may have been legally questionable.

Player participation in the results of【Gameplay 1】competitions is similar.

Gameplay 3: Chess and Card or Similar Gameplay Activities

Currently, chess and card game publication numbers are nearly “extinct,” but some games may wish to design chess-like gameplay activities for “traffic引流” or to increase participation.

Considering current publication number management and criminal risks, these activities should follow these principles:

Cannot be permanent gameplay and should not last too long (changing game nature risks publication number cancellation);

Cannot set entry fees, take commissions, trade积分, or convert to virtual currency/cash/physical items (no further elaboration);

Random matching (avoid providing gambling conditions); a safer approach is to use “anonymous identities”;

Limit daily play counts.

Prohibit providing Texas Hold’em or other gameplay that has been clearly defined as “gambling.”

Gameplay 4: Gameplay Involving Input of充值 Virtual Currency with Random Results Increasing Virtual Currency

This is a broad category, difficult to specify concrete gameplay. A similar example might be the “fishing” gameplay from years ago.

Inputting充值 virtual currency to participate in the game, with each game result being random (unrelated to the player’s personal ability, competitive skill, intelligence, etc.), and winning results in virtual currency rewards.

Such activities carry very明显的 criminal risk. The author does not recommend designing this type of gameplay.

Gameplay 5: Binding to Random Content Results in Reality

For example, inputting充值 virtual currency, where the prize result matches the current welfare lottery result, with winners receiving game道具.

For this type of gameplay, regardless of whether the ultimate prize is充值 virtual currency or merely in-game道具, there is relatively明显的 risk, and it is not recommended.

Gameplay 6: Providing Room Functions with Chat Functions (or Similar Functions) Including Random Results

Common examples include group chats with “dice” or “card drawing” gameplay, potentially constituting “providing a gambling environment.”

Private chats are similar.

Gameplay 7: Providing Lottery-like Gameplay

That is: inputting【充值 virtual currency】to purchase one or more lottery tickets, drawing at a specified time, and receiving certain rewards based on results (whether充值 virtual currency or ordinary in-game道具).

This type of gameplay may constitute “issuing or selling lottery tickets without state approval.”

3. Summary

To summarize briefly, the most basic requirement is to avoid【inputting充值 virtual currency】and【producing充值 virtual currency】, isolating【充值 virtual currency】from all “probability-based” gameplay.

At the same time, strengthen in-game chat management to avoid becoming a引流 tool for lawbreakers.

IV. Once This Crime is Constituted, Which Employees May Bear Criminal Liability?

The subject of the “crime of running a gambling establishment” can only be individuals; games and game companies themselves cannot constitute this crime (but may be deemed “gambling establishments”).

Chen Moujie’s arrest indicates that company responsible persons 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, et al., First Instance Criminal Judgment for Running a Gambling Establishment

In this case, the involved game “Big Xinjiang Mahjong” was deemed to “provide convenience for gambling.” Ultimately, a total of fifteen people were prosecuted and sentenced, including eleven game company personnel, all convicted in the first instance of “running a gambling establishment,” with a total illegal income of RMB 1.2 million.

The positions of game company personnel were:

Personnel	Position	First Instance Sentence
Tian X	Legal Representative	3 years imprisonment, 3 years probation, fine RMB 50,000
Wang Y X	General Manager	2 years imprisonment, 2 years probation, fine RMB 30,000
Wei X	Programmer	1 year 6 months imprisonment, 1 year 6 months probation, fine RMB 10,000
Wang X	Planner	1 year 6 months imprisonment, 1 year 6 months probation, fine RMB 10,000
Chen X	Artist	1 year 3 months imprisonment, 1 year 3 months probation, fine RMB 10,000
Xu X	Customer Service	1 year imprisonment, 1 year probation, fine RMB 10,000
Zhang X	Tester	10 months imprisonment, 10 months probation, fine RMB 5,000
Li X	Operations	1 year imprisonment, 1 year probation, fine RMB 10,000
Liu X	Promoter	1 year imprisonment, 1 year probation, fine RMB 5,000
Wu X	Financial	1 year imprisonment, 1 year probation, fine RMB 5,000
Zhou X	Agent	1 year imprisonment, 1 year probation, fine RMB 10,000

As can be seen from the table, from company responsible persons to managers, programmers, planners, and even customer service staff, all may bear criminal liability.

It is worth noting that this case was decided in 2019. The Criminal Law Amendment (XI), effective March 1, 2021, amended Article 303 of the Criminal Law, raising the first-tier maximum statutory penalty for “running a gambling establishment” from the original three years’ imprisonment to five years.

Therefore, for similar cases involving actual imprisonment, if sentenced today, the term would increase by one to two years.

V. Conclusion

Chen Moujie’s case is not just “water-cooler gossip” but a wake-up call for every internet practitioner.

This case reminds us that many behaviors that might originally have been considered not illegal, even those that seemed to have been “done for years,” may in essence be illegal or even criminal. In the rapidly developing internet industry, with continuously evolving regulations, compliance awareness is crucial. We cannot ignore legal constraints because of past practices; instead, we should maintain constant sensitivity to regulations and high vigilance regarding compliance.

As internet practitioners, we should take Chen Moujie’s case as a warning. We must not only focus on business development but also act 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, with compliance as the cornerstone, to build a clean and fair internet environment.