What are the legal compliance points for card Web3 games?

Background:

I saw two news recently, one in 2024 On February 29, 2019, the trading card game Parallel launched a public beta version. The other is the e-sports game Degen Game (a real-time strategy game that combines MOBA and cards, also known as the Web3 version of Clash Royale) launched by DegenVerse, a Web3 game e-sports entertainment platform, which received strategic investment support from Boyaa Interactive.

Both these two pieces of news conveyed to us a message that chain modification of traditional card games and applying them to the Web3 game field seems to be a good direction.

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

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

Card games can be roughly divided into traditional card games, trading card games (TCG) and general card games.

TraditionalCard games, or card games, such as "Poker", "UNO", etc. .

Trading card game is based on collecting cards. The collected cards are composed into decks and played Game battle. Compared with traditional cards, the difference between trading cards is that the decks used in the game are no longer fixed. For example, Pokémon trading card game, Hearthstone, etc.

PanCard Game, which integrates more elements, such as Dota Legend, which combines cards and action, and Card and Clash Royale that combines real-time strategy, Arknights that combines cards with tower defense, etc. Compared with trading card games, card games have made more extensions to electronic games.

Legal issues in the business model of card games

1. Class blind box The card sales model

The gameplay of the trading card game is that players form a deck of collected cards and compete against each other. There are two ways to collect card decks: pre-pack and supplementary pack. The so-called pre-pack is a deck composed by the official itself. The cards in it are all fixed and can be played after being opened. The supplementary pack is to put a certain number of cards with a certain theme into the card pack, and the cards in it are randomly obtained. This results in a certain scarcity of a small number of cards.

Although my country currently does not have legal regulations specifically targeting trading card games, its business model and sales strategy are somewhat similar to blind boxes. They all create a phenomenon of scarcity of specific cards to attract players to buy more card products. Therefore, you can refer to the applicable laws and regulations regarding blind boxes.

For example, Pokémon cards only use red and blue to represent the rarity of the card, but the rare cards and common cards in each pack of cards are not announced. Proportion of cards.

In the "Shanghai Compliance Guidelines for Blind Box Business Activities", it is stipulated that blind box operators should disclose "product types, box drawing rules, product distribution, product quantity, hidden money extraction probability, product Key information such as the value range, the number of times each series can be drawn, and the amount limit.”

2. Legal issues faced by second-hand card trading

When players cannot purchase their favorite cards through official channels, they will look for ways to trade second-hand cards. Such as offline trading clubs or online live card drawings. The scarcity of cards will trigger market speculation. After market speculation, the nature of cards has undergone a qualitative change from game competitive attributes to financial attributes.

In June 2021, a judicial auction triggered heated discussions on the Internet. A Blue Eyes White Dragon game card that seems to have no actual functions has a starting price of 80 yuan, and the highest bid for this game card has exceeded 87 million yuan.

In various popular card demolition live broadcast rooms on Douyin, players or scalpers draw cards in order 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 its price will be), many players generally agree on the rarity of the card, then the card The price of the card will skyrocket due to its collectible value.

These buyers may not use the purchased cards to play battle games, and the purchased cards may be sold by them at a higher price.

In January 2022, all members of a certain star card club were arrested during a live broadcast, causing the live broadcast to be interrupted. The reason is that this gameplay already 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 and broad. The results of card drawing are random, and the drawn cards can be cashed out and exchanged for legal currency. This has formed a closed loop of the gambling chain.

3. Risks that need to be avoided when hosting a live broadcast of a card event

The organizer of the game event will use the live broadcast Online game competitions have formed a common business model. Hosting live broadcasts of game events itself does not involve any illegality, but the settings of some gameplay mechanisms may involve legal risks involving gambling, for example: the platform allows anchors to privately add player contact information and recover game coins; the platform and Banks and merchants cooperate to provide users with game currency/game props monetization services for users to score points, and the platform organizes users to conduct live betting, gamble on the results of the game, etc.

For example, in October 2023, the Shanghai High Court issued 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 "Honor of Kings" and "Peace Elite" mobile game competitions. The top players can share the "bonus pool", and the APP will "take" from the tickets and set up a cash withdrawal function. After the game, players can withdraw cash from the APP based on their ranking. As of the incident, the amount of gambling money on the APP reached more than 2 million yuan, and the platform organizers were sentenced by the court to the crime of opening a casino.

Mankiw Lawyer Compliance Advice

1. Prevent the risks that cards bring to the platform due to their financial attributes

In the business model In terms of design, the platform needs to find a balance between profit and compliance. In terms of gameplay design, strengthening the scarcity attribute of certain types of cards will enhance the fun of the game and mobilize players' enthusiasm to participate in the game. However, excessive publicity and momentum will cause speculation and make the price of scarce card resources reach a high level. to outrageous prices. If the platform supports players to trade with each other, the platform only charges a handling fee. If the price of the scarce card drops in the future, the buyer who finally takes over will be dissatisfied with the platform due to his own losses. If the platform does not open a secondary trading market, but supports mutual transactions between players, the price speculation will become even more uncontrollable (because the platform cannot limit the price). Both of the aforementioned trading models may lead to complaints from relevant users due to a drop in the price of scarce cards. In this case, the platform may be interviewed by the relevant regulatory authorities for rectification, or may involve criminal risks.

2. Prevent gambling risks in the setting of game mechanisms

In foreign Web3 games, in-game tokens can be traded on virtual currency exchanges, which naturally have financial attributes. However, in China, the redemption of virtual currency funds must be prohibited in the gameplay of card games. In the card game, players need to formulate appropriate strategies based on the attributes and skills of the cards. There are complex interactions between different cards. Players need to make the best decisions through careful consideration. There will be rich content in the game. Players can adjust their tactics according to different opponents, so it is not a matter of betting on probability. However, as mentioned above, if there are modes such as betting on winning or losing, live broadcast card drawing, etc., there is still the possibility of gambling.

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

Lawyer Shao Shiwei, Master of Laws from East China University of Political Science and Law, has been practicing law for 7 yearsHandling more than 300 litigation and non-litigation cases >, with solid legal theoretical foundation and practical case-handling experience.

Served as legal counsel for dozens of companies, and served as legal counsel for many domestic and foreign chain game platforms, Yuanverse social platform, and e-commerce transactions We provide legal services to Internet companies and blockchain companies such as platforms, and have in-depth research on digital asset protection, cross-border data, platform operation compliance, information protection and other aspects.

He is good at building a corporate compliance system based on the company's own business needs and combining industry regulatory regulations, improving the company's internal governance structure, and being able to do its best on the basis of compliance to effectively meet or achieve customers’ business objectives, complete projects and conclude deals.

Main business areas:

Data crime and data compliance governance

Information cybercrime, Internet black and gray crime

Criminal defense involving blockchain and currency circles

Prevention of high crime risks in enterprises Prosecution and defense

Typical cases:

1. Represented a legal person on a digital collection platform suspected of fraud. The lawyer submitted a legal opinion of more than 10,000 words and communicated with the prosecutor for many times to discuss the business model of the digital collection industry. and the operating rules of the platform, and proposed the operating behavior of the platform and the parties involved. The innocence defense opinion was finally adopted by the judicial authorities. Four months after the arrest of the legal person, the police dismissed the case;

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2. Represented a loan assistance company in a case involving alleged infringement of citizens’ personal information. After communicating with the prosecutor in charge and writing a legal opinion of tens of thousands of words,

strong>The procuratorate finally returned the case to the police, and the case was dismissedThe case;

3. Represented a legal person of a technology company in a case suspected of assisting information network criminal activities. After the lawyer met to inquire about the case and investigated and collected evidence, he submitted defense opinions to the prosecutor in charge: The evidence in this case is insufficient and the party concerned does not constitute a crime. The Procuratorate A decision was made within 37 days not to approve the arrest and the case was finally withdrawn;

4. Represented a legal person of a company suspected of falsely issuing special value-added tax invoices , combined with the criminal circumstances, guilty plea attitude, return of stolen goods, etc. of the enterprise involved, in accordance with the central government’s spirit of “less arrest, prudent prosecution, prudent detention”, it was proposed that the circumstances of the party’s crime were obviously minor and harmful. Not serious, it was recommended that the parties not be prosecuted, which was adopted by the Procuratorate, and the case was eventually handled as a non-prosecution;

5. Represented an employee in a case of illegally absorbing public deposits, and put forward the defense opinion that the employee was not a company executive and was an accessory, and his family members withdrew the corresponding illegal income. The client was sentenced to probation (There were nearly ten co-defendants, and only the employee was sentenced to Probation);

Core Strengths:< br>

Have rich practical experience, be diligent and responsible, efficient and proactive, and actively safeguard the legitimate rights and interests of the parties. We have handled many cases in which the public security organs canceled the cases, the procuratorates did not prosecute, and the courts sentenced them to suspended sentences.