Caixin Weekly | Gambling Scandal Rocks the Voice Live-Streaming Industry (AI Translation)

财新周刊｜语音直播涉赌风暴

1. In April 2025, leading Chinese livestreaming platform Douyu (NASDAQ: DOYU) published its monthly report detailing enforcement actions targeting illegal gambling conducted through its gaming content and external referral links. The company permanently shut down 279 livestream channels involved in such activities. According to Douyu’s "2024 Ecosystem Governance Report," the platform processed 5,620 violations in the past year, focusing on three high-risk scenarios: external gambling platform referrals via livestreams, disguised gambling with third-party game item random rewards, and direct displays of gambling website operations [para. 1].

2. Since 2023, multiple Chinese voice-based livestreaming platforms—including Banban, Xingluo Yuwan, Huanhuan Voice, and Oxygen Voice—have come under police investigation for organizing gambling, creating significant industry-wide disruption. The legal debate centers on platform liability when external markets for virtual item trading arise spontaneously among users. Experts note that platforms are criminally liable if they knowingly allow gambling and profit from it, but not if they actively regulate and prevent such activities, even when chance-based game mechanics exist [para. 2].

3. In late 2022, the Banban platform’s operators were prosecuted in China’s first police-supervised gambling case involving a livestreaming platform. The case, involving the well-known Douyu anchor Fu Hailong, saw large-scale criminal prosecution for organizing gambling through the platform’s "Fans Welfare Club" lottery system, where over 4.42 million user participations amassed 120 million yuan in bets. Three defendants received sentences ranging from three to six years [para. 4][para. 9].

4. The crackdown on gambling extended industry-wide from 2023, resulting in the shutdown of nearly 100 platforms over gambling-related violations. Banban, developed by Changxiangban (Wuhan) Technology, once boasted 36.25 million users and 240,000 streamers. In April 2023, police detained 25 senior employees and later indicted 14 people, including top managers, for organizing gambling. Prosecutors allege Banban embedded games of chance and enabled the conversion of virtual gifts into cash, creating a profitable loop for the platform, guilds, and streamers, with at least 15% of gift value kept as platform commission. Between August 2020 and March 2023, transactions via these gambling channels reached 3.642 billion yuan [para. 5][para. 6][para. 7].

5. The Banban trial began in April 2024 and closed in December but remains to be adjudicated. Prosecutors designated key managers as principal offenders. Defendants argued they implemented anti-gambling mechanisms, handled violations, and lacked criminal intent, while prosecutors maintained the platform purposely established closed gambling loops and facilitated cash-out pathways for users.

6. In a separate case, Xingluo Yuwan, overseen by Beijing Xingluo Technology, was found to have 13,000 users engaging in gambling via a "Lucky Vending Machine" feature, with a total of 68 million yuan wagered. The platform generated revenue by facilitating the exchange of virtual gifts for cash among users and streamers. Founder Zhang Qijun and others received prison sentences in 2024 [para. 10][para. 11].

7. Major controversies persist over platform culpability, particularly regarding the "closed cash loop" (users betting money, exchanging virtual items won via chance mechanics, and withdrawing funds), and whether platforms profit knowingly from user-led gambling. Defendants claim adequate compliance and anti-gambling steps, while prosecutors argue platforms intentionally structure mechanics to encourage gambling and profit directly [para. 13][para. 14][para. 15].

8. Experts, including legal scholar Wang Gang (Tsinghua University), argue platform liability is determined by whether virtual items can be exchanged for real money, if a large-scale trading market for virtual goods emerges, and whether management knowingly allows gambling trades. He stresses that regulatory obligations scale with the platform’s intent and efforts to prevent abuse, and that direct or indirect commission from probabilistic games usually constitutes criminal gambling under Chinese law [para. 20][para. 22].

9. Regulatory efforts have evolved as gambling mechanisms became central to monetization in the industry since 2017, with platforms, guilds, and streamers sharing proceeds. Early enforcement was case-by-case, but since 2021, regulators have aggressively targeted platforms meeting the "closed fund loop + chance mechanism + commission extraction" triad. Nevertheless, technical opacity, legal ambiguity around virtual economies, and commercial pressures complicate enforcement [para. 35][para. 36][para. 38].

10. Current risks include renewed growth in gambling disguised in voice- and video-livestream social platforms and in gamified elements such as fishing or loot boxes. Suggested countermeasures include legal standardization, industry self-regulation, public reporting, comprehensive user risk assessment, and balance between technological innovation and hazard prevention [para. 40][para. 41][para. 43].