What are the key points of legal compliance for card Web3 games?

background:

I have seen two recent news, one is that on February 29, 2024, the exchange card game Parallel launched a public beta version.Another one is the e-sports game Degen Game (a real-time strategy game combining MOBA and cards, also known as the Web3 version of the Royal War) launched by DegenVerse, a company that has received strategic investment support from Boya Interactive.

Both of these news conveyed a message to us, and applying traditional card games to the Web3 game field seems to be a good direction.

The development of Web3 games is indispensable to learning from traditional games. Similarly, the legal risks that traditional card games have already arisen can also inspire Web3 game entrepreneurs.

What is a Web2 card game?What types are there?

Card games can be roughly divided into traditional card games, exchange card games (TCG) and pan card games.

TraditionCard Game, or card games, such as “Poker”, “UNO”, etc.

Transfer Card Game, based on collecting cards, the collected cards are composed into decks for game battles.Compared with traditional cards, the difference between exchange cards is that the decks used in the game are no longer fixed.For example, Pokémon Collection Card Games, Hearthstone, etc.

pan-Card Game, it combines more elements, such as Dota Legend that combines cards and action, Royal War that combines cards and real-time strategy, Ark of Tomorrow that combines cards and tower defense, etc.Compared with the exchange card game, the pan card game has made more extensions in electronic games.

Legal issues in card game business model

1. Card sales model of blind boxes

The gameplay of a trading card game is that players form a deck to fight.There are pre-groups and supplementary packages to collect decks. The so-called pre-group is a deck composed by the official itself. The cards inside are all fixed and can be played by opening them.The supplementary bag puts a certain number of cards with the theme into the card bag and randomly obtains the cards in it.This leads to a certain scarcity of a small number of cards.

Although there are currently no legal provisions specifically for trading card games in my country, its business model and sales strategy are similar to blind boxes.All of them create a phenomenon of scarcity of specific cards and attract players to buy more card products.soRelated legal provisions on blind boxes can be referred to and applied.

For example, Pokémon cards only use red and blue to represent the rarity of the card, but the ratio of rare and ordinary cards in each package of cards has not been announced.

The “Shanghai Blind Box Business Activities Compliance Guidelines” stipulate that blind box operators should publicize the “product types, box extraction rules, product distribution, product placement quantity, hidden subscription extraction probability, product value range and each series can be extractedkey information such as the number of times and amount limits”.

2. Legal issues facing second-hand card transactions

When players cannot buy their favorite cards through official channels, they will look for second-hand card trading channels.Such as offline clubs or online live broadcast card draws.The scarcity of cards will trigger market hype. After market hype, the nature of cards will undergo a qualitative change from game competitive attributes to financial attributes.

In June 2021, a judicial auction triggered heated discussions on the Internet.A Blue Eye White Dragon game card that seems to have no actual functions starts at 80 yuan, and the maximum bid for the game card auction has exceeded 87 million yuan.

In various popular live broadcast rooms for card dismantling on Douyin, players or scalpers draw cards to obtain rare cards.Based on the “consensus” psychology in the card circle (this is similar to NFT digital collections. The more people recognize the value of a certain type of NFT, the higher the price will be), many players generally agree with the rarity of cards, and then the card will beThe price of a brand will soar due to its collection value.

These buyers may not necessarily play battle games with the cards they purchased, and the cards they purchased may be sold more by them at a higher price.

In January 2022, all members of a star card club were arrested during the live broadcast, resulting in the interruption of the live broadcast.The reason is that this gameplay involves gambling.The reason why card drawing constitutes online gambling is that users pay to purchase goods and draw cards based on the mentality of small profits and big profits. The card drawing results are random, and the cards drawn can be cashed and exchanged for fiat currency, which has formed a closed loop of the gambling chain.

3. Risks to be prevented when holding live broadcasts of card events

The organizers of game events have formed a common business operation model by broadcasting online game competitions live.Holding a live broadcast of game events does not involve any illegality, butThe settings of some gameplay mechanisms may involve gambling legal risks.For example: the platform allows the anchor to privately add player contact information and recycle game coins; the platform cooperates with the bank merchants to provide game coins/game prop monetization services for users to divide the game, and the platform organizes users to watch the game to make live betting, and bet on the results of the game to bet on gambling and bet on the results of the game.wait.

For example, in October 2023, the Shanghai High Court released aCase:

(https://mp.weixin.qq.com/s/qFVfzjd3SbMcToZtnAiOVA)

Li Moumou runs an e-sports company. In 2020, the company developed and launched an online game APP, which can form teams online and organize players to purchase tickets to participate in the “Glory of Kings” and “Peace Elite” mobile game competitions.Players in the top can divide the “bonus pool”, the APP “taps” from the tickets, and set up withdrawal functions.After the game is over, players can withdraw cash from the APP according to their ranking.As of the incident, the amount of gambling funds of the APP reached more than 2 million yuan, and the platform organization personnel were sentenced to the crime of opening a casino by the court.

Mankun Lawyer Compliance Advice

1. Prevent the winds that cards bring to the platform because of their financial attributesrisk

In the design of business model, the platform needs to seek a balance between profit and compliance.In terms of gameplay design, strengthening the scarce attributes of certain types of cards will enhance the fun of the game and mobilize players’ enthusiasm for participating in the game. However, excessive publicity and momentum will trigger hype and make the price of scarce card resources highTo an outrageous price.If the platform supports players to trade with each other, the platform will only charge a handling fee. If the price of the scarce card falls in the future, the buyer who takes over will be dissatisfied with the platform due to his own losses.If no secondary trading market is opened on the platform but supports mutual trading between players, the price speculation will become more uncontrollable (because the platform cannot limit the price).Both of the above trading models may cause complaints from relevant users due to the falling price of scarce cards. In the case of another, the platform will be interviewed by relevant regulatory authorities for rectification at the least, and in the worst case, it will involve criminal risks.

2. In terms of setting up the game mechanism, prevent gambling risks

In foreign Web3 games, tokens in the game can be traded in virtual currency exchanges, which naturally have financial attributes, but in China, in terms of card games, virtual currency funds must be prohibited from returning to the return.In card games, players need to formulate appropriate strategies based on the attributes and skills of the cards. Different cards have complex interactions, and players need to make the best decisions through careful consideration, and there will be rich in the game.The tactical choice of players can adjust their tactics according to different opponents, so it is not a gambling probability itself.But as mentioned above, if there are models such as betting and winning or losing, live card drawing, there is still a possibility of gambling.

Author of this article:Lawyer Shao Shiwei (Senior lawyer of Shanghai Mankun Law Firm)

Lawyer Shao Shiwei, Master of Law, East China University of Political Science and Law, has been practicing lawyer for 7 yearsProcessingLitigation and non-litigation casesMore than three hundred pieces, has solid legal theory foundation and practical case handling experience.

Zeng RenDozens of corporate legal counsel, providing legal services to many domestic and foreign chain game platforms, Yuanyun social platforms, e-commerce trading platforms and other Internet companies and blockchain companies, providing legal services to protect digital assets, cross-border data, platform operation compliance, information protection, etc.Have in-depth research.

He is good at building a corporate compliance system based on the company’s own business needs and combined with industry regulatory regulations, improving the company’s internal governance structure, and being able to effectively meet or achieve customers’ business purposes on the basis of compliance to the greatest extent possible, complete projects and reach transactions.

Main business areas:

Data Crime and Data Compliance Governance

Information cyber crime, Internet black and gray crime

Criminal defense involving blockchain and currency circles

Prevention and control of high-incidence crime risks in enterprises and defense

Typical cases:

1. Agent to a legal person on a digital collection platform suspected of fraud, the lawyer submitted a legal opinion of more than 10,000 words, communicated with the office security prosecutor to discuss the business model and platform operation rules of the Shucang industry, and proposed the business behavior of the platform and the parties involved.The defense opinion on innocence was finally adopted by the judicial authorities, 4 months after the legal person was arrested, the public security revoked the case;

2. A case of a loan assistance company suspected of infringing citizens’ personal information was communicated with the prosecutor in charge and writtenTens of thousands of words of legal opinion,The procuratorate finally returned the case to the public security.This case is withdrawncase;

3. A case of a legal person in a technology company suspected of assisting information network crime activities was filed with lawyers after meeting with him to inquire about the case and investigate and collect evidence.The evidence in this case is insufficient and the parties do not constitute a crimeAfter the defense opinion, the procuratorate made a decision not to approve the arrest within 37 days and finally withdrew the case;

4. Agent to a case of a legal person suspected of issuing a special value-added tax invoice, combined with the criminal circumstances, attitude of confession, return of the stolen goods, etc. of the company involved in the case,According to the spirit of the central government’s “fewer arrests, cautious prosecutions, cautious detentions”, the circumstances in which the parties commit this crime are significantly minor and have little harm.It is recommended that the parties are not prosecuted and adopted by the procuratorate, the case will not be prosecuted in the end;

5. The case of an employee suspected of illegally absorbing public deposits was proposed by the person who was not a company executive or an accomplice, and his family members withdrew from the corresponding illegal income, and the party was sentenced to probation (Nearly ten accomplices, only one employee was sentenced to probation);

Core advantages:

Have rich practical experience, diligent and responsible, efficient and proactive, and actively safeguard the legitimate rights and interests of the parties.Many cases of public security organs revoked, the procuratorate did not file a prosecution, and the court sentenced probation to a probation.