Special Disclaimer: This article is an original work by Attorney Shao Shiwei. It reflects solely the personal views of the author 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:
According to a notice issued by the Dujiangyan Public Security Bureau, Chen Shaojie, Chairman of the Board and CEO of DouYu, was arrested on suspicion of the crime of opening a casino. Prior to this, there had been continuous news reports exposing DouYu streamers engaging in gambling activities by exploiting the platform’s live-streaming lottery rules. Examples include the DouYu streamer “Shan Shan Jiu Outdoor,” who was sentenced by the Dujiangyan Court last year; the so-called “Changsha Rural Daredevil Team,” which media outlets had previously exposed as the “largest casino on DouYu”; and a certain “PUBG” game streamer whose arrest on suspicion of opening a casino was announced by the Jinzhou Public Security Bureau on November 29, 2023.
In fact, it is not only DouYu; cases in which streamers on other platforms are convicted of the crime of opening a casino are not uncommon, for example:
On August 4, 2022, Chen was indicted by the People’s Procuratorate of Yanshi District, Luoyang City, after being reported for soliciting individuals to engage in crowd gambling through game live-streaming in his channel, and was sentenced to six years’ imprisonment [1];
In August 2023, following indictment by the Haishu District People’s Procuratorate, a sports-event streamer on a certain live-streaming platform was sentenced by the court to two years’ imprisonment for the crime of opening a casino, for promoting online gambling platforms in his channel and inducing fans to participate in gambling [2].
On November 8, 2023, because streamer Ding and two others actively induced gamblers to send virtual gifts and place bets to conduct online gambling in their channel, the Yuzhou City People’s Court, at first instance, convicted the defendants of the crime of opening a casino [3].
Thus,if a streamer is sentenced, can the platform remain “unscathed”?In “Live-Streaming Lotteries: Gambling or Lawful Prize Sales?In the article, we have already explained why live-streaming lucky draws may involve gambling-related criminal offenses. So, when streamers engage in such activities, does the platform bear no liability whatsoever?
Author of this article: Attorney Shao Shiwei
01
Why Platforms Face Criminal Liability Risks
If the platform argues thatthe platform is merely a carrier, and the streamer’s criminal liability arises from their own conduct and has nothing to do with the platform,。
this would be akin to a user employing chat applications such as WeChat or QQ to communicate with others in furtherance of fraud; the chat application, as the platform provider, would not itself be suspected of committing a crime. Similarly, if a tenant consumes drugs within a rented premises, the landlord does not necessarily constitute the offense of harboring others for drug use. Is such an explanation meaningful? The answer is no.
The two examples of chat software and leased housing share a common characteristic:privacyIn other words, chat software does not proactively obtain and monitor all communications between users; likewise, landlords are generally unaware of their tenants’ conduct within the leased premises.
Live-streaming platforms, by contrast, exist precisely to be viewed by a broad audience. Only with greater traffic can platforms generate revenue, directly or indirectly, through various means.
In fact, when analyzed from the perspective of the constituent elements of the crime of operating a casino, live-streaming platforms possess inherent advantages that make it highly likely for them to evolve into online casinos.
First,Operational NatureOperators running a casino act with the intent to make a profit, and therefore organize gambling activities on a regular and continuous basis.
Secondly,Public AccessibilityThe gambling activities are open to an unspecified group of people.
Finally,Liquidity of Gambling FundsOnly with substantial inflows and outflows of gambling funds can the organizers extract a cut and generate profits.
Live-streaming platforms operate for profit and are open to the general public. Gambling activities disguised as prize draws attract a large number of users to recharge and participate.
02
Under what circumstances do platforms face heightened criminal liability risks?
We take the DouYu platform and its related streamers as examples for analysis.
1. Assess the Platform’s Level of Involvement
For gameplay mechanics such as live-stream lucky draws, if the relevant game rules are independently established by the streamer, who also retains control over the configuration of the lucky draw system, and the activity is conducted exclusively within the streamer’s own channel, with any reverse conversion (as discussed in point 2 below) being solely at the streamer’s discretion, such conduct may be deemed the streamer’s personal act, with the platform serving merely as the carrier selected by the streamer.
In 2019, DouYu, in its capacity as the official platform, launched the “Lucky Treasure” lucky draw campaign. Due to gambling-related risks associated with this campaign, the platform subsequently discontinued it. However, similar “card-purchase lucky draw” activities on the platform were not thereby terminated; channels such as “Shan Shan Jiu Outdoor” and “Changsha Rural Daredevil Squad” employed comparable mechanics.
According to Yema Caijing [4], although the gambling-related activities in streams such as those operated by “Shan Shan Jiu” were not officially organized by DouYu, the platform was not entirely unaware and may have even provided internal guidance, including detailed instructions on the scripts used by streamers for their lucky draws. If true, this would indicate that the platform was closely involved in the streamers’ gambling-related activities.
2. Examine whether the platform facilitated the reverse conversion of in-game currency
“Reverse conversionrefers to the process by which users convert virtual coins or items obtained on the platform back into cash, as opposed to the initial topping up of funds into the platform by users.
Probability-based gameplay mechanics such as lucky draws are not inherently unlawful and constitute normal commercial promotional methods. A key factor in determining the involvement of gambling is the reverse conversion of in-game currency.
In the “card-purchase lucky draw” activities conducted by DouYu streamers in their channels, users could participate in lucky draws for virtual coins worth tens of thousands of yuan by purchasing designated items for only a few yuan. Upon winning, streamers would cash out the prizes to users via Alipay or through third-party channels such as “inventory traders.” While this may appear to be the streamers’ personal conduct, various public media reports indicate that the streamer “Changsha Rural Daredevil Squad” generated an annual transaction volume of RMB 177 million, “Shan Shan Jiu Outdoor” generated nearly RMB 120 million over three years, and, according to a notification issued by the Jinzhou Public Security Bureau on November 29, a certain “PUBG” game streamer who was apprehended was involved in transactions totaling RMB 17 million. Absent any assistance or support from the platform, it is difficult to envision how streamers could have carried out individualized conversions for users.
Although the platform officially stated that “gift items in this interactive feature cannot be reversely converted into cash, Fish Wings, or other valuable property; DouYu prohibits and strictly cracks down on any form of offline transactions,” users could sell the Fish Wings they obtained through other channels to Fish Wings recyclers. This effectively achieved the reverse conversion of virtual items into fiat currency.
3. Examine whether the platform derived profits therefrom
The transaction volumes generated in streamers’ channels are directly linked to the platform’s profitability. Virtual items contributed by users to streaming channels are subject to revenue sharing in accordance with platform rules. According to Yema Caijing [5], DouYu streamers had high-stakes performance-based betting arrangements with the platform; under significant pressure from transaction volume targets, lucky draws became the optimal solution for streamers to alleviate their anxieties regarding these performance bets.
Given that the platform’s revenues are directly tied to the transaction volumes in streamers’ channels, it is implausible that the platform was unaware of the types of activities through which streamers continuously generated substantial transaction volumes.
Streamers and platforms are, without doubt, a community of shared interests. The platform is aware that the streamer’s live-streaming room involves gambling-related activities, yet adopts a tacitly permissive stance. This has enabled these streamers to continuously conduct card-purchase lottery draws over many years.
03
If the platform is subject to criminal liability, what are the relevant charges?
1. Crime of operating a casino
Based on the analysis in point 2 above, if the platform, with knowledge that the streamer is engaged in gambling-related conduct, engages in any of the following acts, the relevant personnel face a heightened risk of constituting the crime of operating a casino:
For example: participating in the formulation of game rules, and providing guidance and assistance for the streamer’s live-streaming activities;
the lottery draw utilizes the platform’s system, and the streamer does not have control over the lottery system;
providing direct or indirect channels for reverse redemption and cash-out for streamers involved in gambling-related activities;
taking a cut and profiting from gambling-related live-streaming activities.
2. Joint offense in the crime of operating a casino
Unlike the foregoing, the platform’s relevant personnel constitute accomplices on the premise that the streamer has committed the crime of operating a casino; the platform provides aiding conduct and itself fails to diligently perform its relevant regulatory obligations.
For example, knowingly tolerating or tacitly permitting relevant streamers to conduct gambling-related activities;
providing related technical support for such gambling-related activities;
Providing traffic support, advertising placements, and platform endorsement for such gambling-related activities.
3. Money laundering offenses, such as the crime of aiding information network criminal activities and the crime of concealing or disguising the proceeds of crime
If the platform is not subjectively aware of the gambling-related activities and does not share in the profits, but is merely used by relevant streamers as an online vehicle to facilitate gambling-related conduct, and the funds deposited by users are involved in other upstream criminal activities, then the platform may be suspected of committing money laundering offenses, such as the crime of aiding information network criminal activities and the crime of concealing or disguising the proceeds of crime.
04
Compliance recommendations for the platform operator:
To mitigate platform risks arising from streamers’ involvement in gambling, the platform must strengthen its compliance framework. For example, it should improve its risk control mechanisms to strictly prohibit gambling and cash-out activities, imposing penalties such as muting or account bans on relevant streamers and users upon detection; enhance supervision and reporting mechanisms to promptly detect, track, and address abnormal transaction flows and activities; and ensure that the platform does not provide, directly or indirectly, any reverse exchange services converting virtual currencies or items into RMB.
[1] http://www.hebi.jcy.gov.cn/yasf/202307/t20230713_5831457.shtml
[2] Prosecutors Online | Streamers Broadcasting Gambling Content Face Unnegotiable Penalties!
[3] Two “Streamers” Conduct Gambling Broadcasts in Their Live Rooms—Truly Criminal! _ The Paper Official Account _ The Paper https://www.thepaper.cn/newsDetail_forward_25257567
[4] [5] DouYu’s “Major Streamer” Sentenced to Six Years for Gambling Involvement: What Liability Should the Platform That Engaged in Performance-Based Betting with Him Bear? https://mp.weixin.qq.com/s/4OVG_7rqd9FhIqf0zZtiXQ
