Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the author’s personal views and does not constitute legal advice or a legal opinion on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66
Introduction:
In my previous articles, I analyzed why live-streaming activities may involve gambling, and examined the legal risks faced by streamers, live-streaming platforms, and streaming guilds.
Regardless of how innovative the gambling-related mechanics in live-streaming rooms become, their essence remains unchanged: they always involve “paid participation,” “small stakes for potentially large gains,” and “cash or in-kind payouts.” If streamers, platform operators, or guilds are arrested on suspicion of operating a casino due to such live-streaming mechanics, what are the key points for criminal defense? This article discusses these issues from three perspectives: defense for acquittal or lesser culpability, and defense for a lesser offense.
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Perspectives on Defense for Acquittal or Lesser Culpability
The reasons for discussing defenses for acquittal and for lesser culpability together stem from practical judicial considerations. Once live-streaming activities are characterized as operating a casino, it is often futile for involved parties to claim innocence in most cases.
Under the Criminal Law, this offense is determined based on conduct, without requiring proof of a profit motive. Therefore, defenses such as claiming “lack of knowledge” or “no profit obtained” will not affect the judicial authorities’ characterization of the offense.
However, under certain circumstances, if a non-prosecution decision can be secured from the procuratorate—whether statutory, discretionary, or due to insufficient evidence—the individual will not have a criminal record, which is effectively equivalent to an acquittal. In this way, the lawyer achieves the goal of providing“effective defense”for the client.
Apart from “non-prosecution due to insufficient evidence,” which requires case-by-case analysis, the most common grounds for prosecutors to decide on “statutory non-prosecution” or “discretionary non-prosecution” are findings that the circumstances of the case are minor, the harm caused is insignificant, and criminal punishment is unnecessary. What scenarios might lead prosecutors to determine that “the circumstances of the crime are minor”? The following three categories are listed below:
1. No participation in profit sharing; receipt of fixed salary only
If the streamer involved in the case is employed by the platform or guild, receives a fixed monthly salary, and their specific daily work content and manner of performance are strictly controlled by the platform or guild, with no decision-making authority over livestream activities, then the streamer’s status is equivalent to that of an ordinary entry-level employee. If key personnel of the platform or guild are implicated in the case, employees may be considered accessories, allowing for arguments to mitigate punishment or even seek non-prosecution.
2. Short duration of involvement in the illicit activity, with no or minimal illicit gains
This point considers the social harm caused by the actor during the period of involvement. If the gambling platform or activity has operated for a considerable time, and the transaction volume meets the threshold for sentencing principal offenders to 5–10 years’ imprisonment, staff members who served as streamers, finance personnel, operations staff, planners, etc., for a short period may still have grounds to argue for mitigated punishment or even non-prosecution. For example, in the 2021 “Die Lian APP” gambling case, a procuratorate in Jilin Province decided not to prosecute certain streamers who had been involved for a short duration.
3. Voluntary restitution of illicit gains
Whether the actor pleads guilty and accepts punishment, and whether they are able to make restitution, although not statutory grounds for mitigation, are important factors considered by judicial authorities in practice when deciding whether to impose lighter penalties or even decline prosecution. Regarding the amount of restitution, if the platform’s transaction volume is substantial, judicial authorities will typically appoint a third-party audit firm to conduct an audit before reaching a conclusion.
Additionally, regardingthe specific amount of restitution, counsel may build defenses based on the amounts determined by the audit firm. For instance, cumulative user bets may lead to double-counting of gambling funds. Alternatively, if streamers or guilds, in an effort to maximize profits, exploit platform mechanisms by sending gifts to themselves and then cashing out through third parties, the gambling funds attributable to the actor’s own betting activities should be deducted.
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Defense Strategies for Lesser Offenses
The crime of operating a casino carries a maximum sentence of 10 years’ imprisonment, while the crimes of gambling and aiding information network criminal activities carry maximum sentences of 3 years’ imprisonment.
Even if the actor was initially investigated under the charge of operating a casino, it remains possible to argue for reclassification to a lesser offense at a later stage.
1. Reclassification of the offense of operating a casino to the offense of gambling
One distinguishing feature of the offense of operating a casino, as compared with the offense of gambling, ispublicity。
For example, gambling-style gameplay resembling WeChat red-packet games (among a fixed group of acquaintances, participants compete by comparing the amounts in WeChat red packets; the person who receives the smallest amount loses and must issue the next red packet, with this cycle repeating) was characterized by the court as the offense of gambling in Case No. (2016) Zhe 0302 Xing Chu 408.
If gambling-related activities in a livestream room require users to enter a specific room number to gain access, the participants are limited to a fixed group, the gameplay mechanics are not publicly promoted, and the activities are not open to the unspecified public, then there is substantial scope for defense arguments that the conduct constitutes the offense of gambling (crowd gambling) rather than the offense of operating a casino.
2. Reclassification of the offense of operating a casino to the offense of aiding information network criminal activities
Where the volume of fund flows involved is substantial, the choice of charge determines whether the maximum potential sentence imposed on the perpetrator is three years or ten years.
In March 2023, the People’s Procuratorate of Fenghua District, Ningbo, published a case[1] in which Xu, a sports-event livestream host, used his own channel and a recruited team of hosts to drive traffic through livestreaming. While providing commentary on sports events, he inserted advertisements to direct traffic to a cross-border online gambling platform, thereby obtaining profits exceeding RMB 300,000. The court convicted Xu of the offense of aiding information network criminal activities.
In the aforementioned case, Xu’s conduct amounted to driving traffic to gambling websites. Pursuant to the Opinions on Several Issues Concerning the Application of Law in Handling Cases of Online Gambling Crimes (hereinafter referred to as the “Opinions”), those who “provideinternet access, server hosting, online storage space, communications transmission channels, or advertising placement, recruit members, develop software, provide technical support, or other services” for gambling websites are treated as accomplices to the offense of operating a casino. This overlaps with the modes of conduct constituting the offense of aiding information network criminal activities under China’s Criminal Law, namely “internet access, server hosting, online storage, communications transmission, and advertising promotionThe definitions exhibit similarities.
In addition, with respect to payment and settlement, the two offenses also have similar provisions. The Opinions stipulate that “providing fund payment and settlementservices” for gambling websitesconstitutes being an accomplice to the crime of operating a casino. The crime of aiding information network criminal activities provides: “knowingly providing assistance such aspayment and settlementto others who utilize information networks to commit crimes...”
Where a live-streaming platform or streamer provides withdrawal services for virtual items/currencies to users through direct or indirect means, and the platform or streamer is involved in gambling, the entities responsible for the specific withdrawal services (which may be personnel directly employed by the streamer or platform, such as financial staff, or third-party silver merchants/backpack traders) may constitute accomplices to the crime of operating a casino, or may constitute the crime of aiding information network criminal activities.
There is significant overlap in the modes of conduct between the two offenses. Although, from a jurisprudential perspective, whether the actor had knowledge of another’s operation of a casino, and the degree of such knowledge, will affect the final characterization of the case, judicial practice does not provide a very clear delineation. For example, in the aforementioned case where Xu was convicted of the crime of aiding information network criminal activities, “according to Xu’s confession, the purpose of conducting the live stream was to draw viewers to recharge funds for gambling.” From a jurisprudential standpoint, if the actor had knowledge, they should be characterized as an accomplice to the crime of operating a casino; however, this case resulted in a conviction for the lesser offense of aiding information network criminal activities. The lack of clear delineation in judicial practice precisely constitutes the scope for defense arguments that defense counsel may pursue.
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Concluding Remarks:
This article analyzes the key defense points in cases involving gambling in live-streaming rooms solely from the perspective of a criminal defense lawyer. We reiterate that online gambling constitutes illegal and criminal conduct, and gambling-related crimes have consistently been a primary focus of state crackdowns. As an emerging industry experiencing robust growth, live streaming requires streaming platforms and guilds to strengthen industry self-discipline and improve platform oversight mechanisms. Streamers must not take legal risks or violate the law in pursuit of high commissions and generous profit shares.
[1] Fengxian Procuratorate Explains the Law | Live Streaming “Facilitating Gambling,” Multiple Streamers Sentenced https://mp.weixin.qq.com/s/pgIe-FjDtpmL-KbSZiB4Qg
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