Explaining the Law Through a Case: A Crime of Opening a Casino That Underwent Three Trials
Special Declaration: This article is an original work by Attorney Shao Shiwei. It represents only the personal views of the author and does not constitute legal consultation or legal advice on specific matters. For article reposts, legal consultations, or business exchanges, please add: sswls66
The difference between offline gambling and online network gambling lies in the fact that the cash involved in offline gambling is fixed, with a predetermined total amount, whereas online gambling allows for cumulative betting and cyclical wagering. Consequently, in cases involving online gambling crimes, there is often a significant discrepancy between the amount of gambling funds determined by relevant judicial audits and the actual amounts wagered by gamblers. For the defendant, the same nominal amount of gambling funds can result in a substantial difference in sentencing—either below five years or above five years of imprisonment—depending on the calculation method applied.
Although the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security issued relevant judicial interpretations in 2010, ambiguities in the legal provisions have led to ongoing controversies in practice to this day.
In a recent online gambling case handled by Attorney Shao, the public prosecution authority argued that the gambling funds should be calculated based on the cumulative betting amount. The author considers this approach unreasonable. Therefore, this article explores the following question: How should the amount of gambling funds be calculated in online gambling cases?
Author | Attorney Shao Shiwei
01
Retrial of Hua Mou and Others for the Crime of Opening a Casino
An Hong, Hou 1, Hou 2, and Hua Mou served as agents for an overseas gambling website, with their hierarchical relationships illustrated in the figure below. Zhu Mou was a member recruited by Hua Mou [(2016) Hu Xing Zai No. 2].
The court found that Hua Mou accepted Zhu Mou'scumulative betting amountof over RMB 2 million, with a net win/loss amount of RMB 20,000.
According to the 2010 Interpretation on Several Issues Concerning the Specific Application of Law in Handling Criminal Cases of Gambling (hereinafter referred to as the "2010 Interpretation"): "Where gambling crimes are committed via computer networks, the amount of gambling funds may be determined by multiplying the points wagered or won on the computer network by the actual monetary value represented by each point."
Although this provision lists two methods for calculating the amount of gambling funds, namely the betting amount and the winning amount, itdoes not provide detailed explanations on the specific calculation methods for these two determination approaches。
Furthermore, under the 2010 Interpretation, if the cumulative amount of gambling funds reaches RMB 300,000 or more, it meets the standard for "serious circumstances" in the crime of opening a casino, which carries a sentence of five to ten years of fixed-term imprisonment.
If this standard were applied, should Hua Mou in the aforementioned case be sentenced to more than five years?
02
A Twisting Journey
The court of first instance convicted Hua Mou of the crime of opening a casino and sentenced him to one year of fixed-term imprisonment. Dissatisfied, the procuratorate filed a protest, arguing that Hua Mou, acting as an agent for the gambling website, had accepted cumulative bets totaling over RMB 2 million. Thus, his conduct of opening a casino constituted "serious circumstances," and the court's sentencing of Hua Mou was unduly lenient.
After the court of second instance rejected the protest, the Municipal People's Procuratorate filed a protest with the Shanghai High People's Court under the trial supervision procedure. The High Court rejected the protest and upheld the judgment of the first instance.
Precisely due to the lack of clarity in legal provisions, many judicial authorities continue to convict and sentence defendants based on the cumulative betting amount in practice. The consequences extend beyond the determination of the defendant's prison term; they also create contradictory situations where the actual funds used for gambling are small, yet the amount subject to confiscation is enormous. Therefore, although the aforementioned case was adjudicated in 2016, it remains of significant reference value today.
03
Case Analysis
In this case, the procuratorate determined the amount of gambling funds to be RMB 2 million based on the cumulative betting amount. All three levels of courts held that the procuratorate lacked sufficient basis to determine that Hua Mou's conduct constituted "serious circumstances" on this ground.
The viewpoints of the courts across the three trials and the arguments of Hua Mou's defense counsel adopted by the courts are summarized and analyzed as follows:
1. The Issue of Double Counting in Online Gambling Betting Amounts
In gambling formats such as "Baccarat," where multiple rounds can be conducted consecutively within a short period, the betting amount displayed in the network system isderived from the rolling cumulative total of bets placed in each roundThis creates potential issues of double counting when comparing this amount to the gambling quota or the final settled gambling funds, particularly given the fluctuations between wins and losses.
[Analysis] If online gambling betting amounts are calculated using a method that involves double counting, there will be a significant disparity between the gambling funds determined in online versus offline gambling. For example, if the gambler Zhu Mou in this case brought RMB 100,000 in cash to gamble offline, his gambling funds could not exceed RMB 100,000. However, if Zhu Mou used RMB 100,000 to gamble online, assuming he played 10 rounds and lost RMB 10,000 in each round, his cumulative betting total for the 10 rounds would be 10+9+8+7+6+5+4+3+2+1 = RMB 550,000. This figure is calculated under the assumption that he lost RMB 10,000 in each round. If Zhu Mou were skilled and won money in every round, the calculated betting amount would be even higher.
Additionally, the longer a gambler participates, the larger the cumulative betting amount becomes. Therefore, the magnitude of the figure derived from cumulative betting amounts depends on the gambler's skill level and the duration of their participation. This calculation method is clearly unscientific.
2. The Significant Discrepancy Between the Betting Amount and the Final Actual Net Win/Loss in This Case Further Confirms the Issue of Double Counting in Betting Amounts
The court held that although Hua Mou accepted acumulative betting amountof over RMB 2 million from Zhu Mou, the net win/loss amount was only RMB 20,000. Even if the actual (non-double-counted) betting amount cannot be statistically determined based on existing evidence, the vast disparity between the betting amount and the net win/loss amount allows for the inference that the issue of double counting in betting amounts indeed exists.
[Analysis] Although the final effective judgment in this case was rendered in 2016, the 2020 Opinions of the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security on Several Issues Concerning the Handling of Cross-Border Gambling Criminal Cases (hereinafter referred to as the "2020 Opinions") subsequently introduced more rigorous language regarding the determination of gambling funds, such as "determined in conjunction with other evidence." This indicates that the adjudication logic of the judges in this case aligns with the legislative intent reflected in the 2020 Opinions.
2020 Opinions of the Supreme People's Court, the Supreme People's Procuratorate, and the Ministry of Public Security on Several Issues Concerning the Handling of Cross-Border Gambling Criminal Cases
Where the crime of opening a casino is committed via the internet, the amount of gambling funds may be determined based on the betting amount in the accounts actually controlled by the perpetrator of the crime of opening a casino, in conjunction with other evidence; if statistics are unavailable, it may be determined based on the actual amount of funds wagered by the verified participants. Where funds are directly or indirectly exchanged for virtual items such as virtual currencies or game props, and these are used as chips for betting, the amount of gambling funds shall be determined based on the amount of funds required to purchase such virtual items or the amount of funds actually paid.
3. Due to Ambiguities in Legal Provisions, Doubts Should Be Resolved in Favor of the Defendant
Hua Mou's defense counsel argued that regarding the calculation of the "amount of gambling funds,"the 2010 Opinions did not provide explicit provisions on whether amounts from repeated bets in online gambling could be cumulated. Therefore, adhering to the principle of resolving doubts in favor of the defendant, Hua Jiayu's betting amount should not be recognized as exceeding RMB 300,000 and thus should not be deemed "serious circumstances."
[Analysis] The principle of resolving doubts in favor of the defendant is a common defense argument and is not merely empty rhetoric. If the defense counsel can identify sufficient issues with the evidence presented by the prosecution, the court will indeed take these into consideration during sentencing, even if the defendant is ultimately convicted. (In a previous criminal case handled by Attorney Shao, the procuratorate recommended a six-year prison sentence, but the court ultimately granted probation; we may share more details on this in the future.)
Online gambling bets should be understood from the essence of betting [1]. The literal meaning of "betting" is "to place" or "to inject," representing the injection and increase of funds. In offline gambling, cash is used for betting; participants, especially those who lose, inject funds into the game or casino in real time, thereby continuously expanding the scale of real funds. Therefore,the essence of betting in gambling is the increase in the volume of funds. Using this as a standard, when participants in online gambling convert funds into points, thereby increasing the real fund volume of the gambling website, this constitutes the essential act of betting in gambling activities. Subsequently, when participants use these recharged points to engage in specific gambling activities, they are merely utilizing the already recharged funds; no matter how they "bet," it does not increase the volume of real funds. The defense counsel in this case also argued that "the 'betting amount' displayed in the network system in this case is not the same concept as the 'betting amount' referred to in the 'Opinions,' and the two should not be confused or conflated."
Therefore, although neither the 2010 Interpretation nor the 2020 Opinions explicitly stipulate whether "online gambling funds should be calculated by cumulating betting amounts," exploring the original intent of the legislators suggests that the actual betting amount of gambling funds in online gambling cases should be calculated based on the real volume of funds. The phrases "actual amount of funds wagered" and "amount of funds actually paid" cited in Article 2 of the 2020 Opinions emphasize "determination based on actual facts." This further corroborates the legislative viewpoint.
04
Concluding Remarks
In practice, the adoption of cumulative betting amounts to calculate gambling funds, and the subsequent conviction and sentencing of defendants based thereon, is not necessarily because judicial personnel are unaware that this calculation method is unscientific. Rather, it is because this method of evidence collection is the most convenient, requiring only the submission of data from the gambling-involved website to a third-party auditor.
However, verifying the actual recharge amounts of gamblers can present significant evidentiary challenges in practice. For instance, this may involve the exchange of crypto assets, or the use of virtual points created by the gambling website itself, where such points are obtained through exchanges with third-party cooperative platforms (similar to money laundering platforms).
Thus, there are reasons why this seemingly unscientific calculation method persists within judicial authorities. However, existence does not equate to reasonableness. Whether concerning the defendant's prison term, fines, or illegal gains, the defense counsel's arguments regarding the amount of gambling funds hold significant importance.
[1] It Is Inappropriate to Cumulate Betting Points When Determining the Amount of Online Gambling Funds _ Jiangning District People's Procuratorate, Nanjing City
http://njjn.jsjc.gov.cn/wenhua/201912/t20191227_951435.shtml
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