Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects only the personal views of the author and does not constitute legal consultation or legal advice on any specific matter. For article reprints, legal consultations, or business exchanges, please add: sswls66
Introduction:
Live-streaming platforms, streamers, and live-streaming guilds are several fundamental entities in the online live-streaming industry. There can be various cooperation models among them. The complex legal relationships and financial interactions among these entities determine thatif a streamer or platform is involved in gambling, it is difficult for a live-streaming guild to remain "untouched"。
01
What is the nature of a live-streaming guild?
Before analyzing the legal risks of live-streaming guilds, we first need to briefly understand: what do live-streaming guilds do, and what are the relationships between live-streaming guilds, streamers, and live-streaming platforms?
To use a simple analogy, the normal operation of a shopping mall requires merchants to set up stores, and these stores need to recruit salespersons to sell goods. By analogy, in the online live-streaming ecosystem, the live-streaming platform is akin to the shopping mall, each live-streaming room is equivalent to a store, and the streamer is the store's salesperson, selling virtual goods to online users. The revenue of the store depends on tips and gifts from online users to the streamer, as well as other live-streaming room activities that require users to consume virtual coins/virtual props. Since the shopping mall may not have the resources to manage every salesperson, guilds have emerged to act as store merchants, managing each salesperson (streamer).
From the perspective of civil legal relationships, the three parties may form labor contracts, service contracts, brokerage contracts, or service agreements, and there can be different types of cooperation models among them. A streamer may sign directly with a live-streaming platform or choose to sign with a live-streaming guild. A live-streaming guild may be a third-party entity or may be directly invested in by the live-streaming platform. There are also complex interest relationships among the actual controllers of the live-streaming platform, the streamers, and the actual controllers of the guilds. For example, Chengdu Jiutu Cultural Media Co., Ltd. is a live-streaming guild on the DouYu platform. Fu Hailong, a member of its most famous streamer group "Shan Shan Jiu Outdoor," is the largest shareholder of the guild, and the DouYu platform has also taken an equity stake in this live-streaming guild.
(Image source: Tianyancha)
This article takes the cooperation model where a guild joins a live-streaming platform and streamers sign contracts with the live-streaming guild as an example to analyze: if a live-streaming room is involved in gambling, what are the legal risks for the live-streaming guild?
02
If a live-streaming room is involved in gambling, will the guild bear criminal liability?
If a live-streaming channel hosts probability-based games such as live lucky draws, chest openings, or blind box openings, it is difficult for the live-streaming guild to plead ignorance as a defense. After all, the guild bears management responsibilities over the streamers, and its primary revenue comes from sharing in the gift income generated in the streaming channels.
Regarding the settlement methods for commission sharing, we may refer to the relevant contracting rules of platforms such as Huya and DouYu. For example, under the Huya Guild Contracting Rules, Huya distributes commission revenues according to the profit-sharing ratio agreed upon between the streamer and the guild on the Huya platform. The streamer’s streaming revenue is settled into the guild’s account; the guild then withdraws the funds, uniformly withholds applicable taxes on behalf of the streamer, and subsequently distributes the net amount to the streamer. Under the DouYu Guild Entry Agreement, the guild shall pay streamers from the fees paid by the DouYu platform to the guild, in accordance with the profit-sharing ratio agreed upon between the guild and its affiliated streamers.
Therefore, the typical settlement method for streamers’ earnings is that the platform first pays into the corporate bank account of the contracted guild, and the guild then withholds taxes uniformly before paying the streamers.
The composition and calculation of commissions include gifts, virtual items, various promotional activities, advertising revenue, and more. When settling accounts according to the agreed-upon ratio with streamers, the guild is necessarily aware of the composition of each commission item received by the streamer. Probability-based gameplay that allows small stakes to yield large returns requires little effort from rule-makers yet naturally generates substantial traffic. Traffic brings users, and more users generate more revenue. Significant anomalies in transaction volumes would also compel the guild to be aware of what the streamers in their channels are doing.
So, how is this handled in judicial practice?
In a judgment issued in September 2020 by the Tianhe District Court in Guangdong [1], Zhao entered into a cooperation agreement with a company in the name of his own company. Zhao established the “Midi Guild” on the NetEase CC Voice platform, served as the guild head, and recruited multiple streamers. He organized gambling activities in interactive game rooms and launched video-interactive and card-interactive betting events, attracting players to wager virtual coins. Wins and losses were automatically settled by the system based on the betting outcomes. Both the guild and the streamers could take commissions from the virtual coins wagered or tipped by players, according to agreed-upon ratios. These virtual coins were converted into RMB through settlement by NetEase’s backend systems, thereby enabling the operators to take a cut. Audits revealed that the gambling funds amounted to approximately RMB 22 million. As theguild head, Zhao was convicted of the crime of operating a casino and sentenced to four years and six months’ imprisonment [2]. Others sentenced includedthe guild’s finance personnel, streamers, and individuals involved in cashing out virtual coins.。
In October 2022, the Ningyang police issued a case report [3], stating that voice live-streaming gaming apps such as the “XX Planet” app used live-streaming tips as a pretext to embed gambling mini-games like “Open Treasure Chest,” “Blow Bubbles,” and “Interstellar Travel.” The police dismantled two gambling-related app platforms and three gambling-related live-streaming guilds, arresting individuals including the backend owners, operations staff, and technical personnel.guild heads, and streamers.。
Thus, it can be seen thatWhere a live-streaming channel is involved in gambling, the live-streaming guilds clearly face higher risks than the platform operator.Under the Criminal Law of the People’s Republic of China, gambling funds totaling RMB 300,000 or more meet the threshold for “serious circumstances” of the crime of operating a casino, which may result in a fixed-term imprisonment of five to ten years. For live-streaming channels with substantial traffic, the RMB 300,000 threshold may be reached in a single live-streaming event.
03
If a platform is shut down due to gambling involvement, how can live-streaming guilds protect their rights?
When a live-streaming platform is shut down due to gambling involvement, if the guild and its affiliated streamers participated in probability-based game mechanics organized by the platform, such as lucky draws, criminal liability is difficult to avoid. However, even if the guild and its affiliated streamers did not participate, they may still be implicated.
The most common type of rights-protection claim arises from the platform’s failure to settle commissions owed to the live-streaming guild.If the platform is shut down due to gambling involvement, the police will freeze the platform’s fund accounts on the grounds that they contain gambling funds. However, not all funds in those accounts are gambling-related. The lawful income of live-streaming guilds and streamers who did not participate in gambling activities may become unsettled because the platform is unable to make settlements to the guild due to the criminal case.
In such circumstances, two approaches are recommended: first, initiate civil litigation to fix the amounts payable through a civil judgment; second, submit written evidence such as cooperation agreements and explanatory statements to the judicial authorities handling the criminal case, demonstrating that the relevant funds in the platform’s account constitute the party’s lawful income. Regardless of the approach chosen, protecting one’s rights will be a long and arduous process.
Concluding remarks:
Unless the live-streaming platform is merely disguised as a legitimate platform while in substance operating solely as an online gambling platform, generally speaking, the persons in charge of large-scale online live-streaming platforms will not inevitably incur criminal liability simply because some live-streaming channels are involved in gambling.
In practice, it is common for streamers involved in gambling through their live-streaming channels to be arrested,and guilds, as the entities most closely associated with the streamers, are highly susceptible to being implicated.Therefore, persons in charge of live-streaming guilds must not adopt the mindset of “relying on a powerful backer for shelter,” mistakenly believing that cooperating with large online live-streaming platforms will reduce their own risks. Guilds must strengthen their management of streamers and eliminate all gambling-related activities in order to achieve more sustainable development.
[1] (2019) Yue 0106 Xing Chu No. 1689
[2] This case occurred before the 2020 Amendment to the Criminal Law. At that time, the Criminal Law provided that where the circumstances were serious, a fixed-term imprisonment of three to ten years shall be imposed.
[3] Involved funds amounted to RMB 360 million! Ningyang Police dismantle a new type of online gambling syndicate! https://mp.weixin.qq.com/s/5sFkQIJ0kArIJ3WBfdOEZg
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