Illegal business operations do not apply, running a gambling establishment is the real offense.
[2] Compiled from: Anqiu Court, Weifang Intermediate Court
Case review
[3] From March to August 2018, defendants Li, Hou, and Su set up a total of 48 claw machines in front of multiple supermarkets, including Qingyun Lake Supermarket and Jiayi Supermarket in Anqiu City. They purchased various types of cigarettes from some of these supermarkets and placed them in the claw machines, configuring the machines so that inserting 1 or 2 yuan coins allowed one chance to grab a cigarette. The cigarettes grabbed could be exchanged for cash at the supermarkets where the machines were placed. Defendant Li regularly adjusted the current strength of the claw based on the machine's revenue. During the operation, Li was responsible for accounting, purchasing cigarettes, and handling returns, while defendants Hou and Su handled unlocking the machines, collecting coins, and simulating cigarette grabs. Each defendant earned approximately 1.6 yuan in illegal gains.
[4] On September 6, 2018, defendants Li and Hou were summoned and brought in. On September 7, 2018, defendant Su was apprehended by the Anqiu Court while voluntarily surrendering.
[1] Relevant laws and regulations
[5] "Opinions of the Supreme People's Court, Supreme People's Procuratorate, and Ministry of Public Security on Issues Concerning the Application of Law in Handling Cases of Operating Gambling Dens Using Gambling Machines"
Article 1
[6] Setting up electronic gaming equipment with gambling functions such as coin return, point return, or steel ball return, and using cash, securities, or other valuable items as prizes, or repurchasing prizes to give others cash, securities, or other valuable items (hereinafter referred to as setting up gambling machines) to organize gambling activities, shall be deemed as the act of "operating a gambling den" as stipulated in Article 303, Paragraph 2 of the Criminal Law.
Article 2
Regarding the standards for conviction and punishment of operating a casino using gambling machines
Organizing gambling activities by setting up gambling machines, under any of the following circumstances, shall be convicted and punished as the crime of operating a casino as stipulated in Article 303, Paragraph 2 of the Criminal Law:
(1) Setting up 10 or more gambling machines;
(2) Setting up 2 or more gambling machines and harboring minors for gambling;
(3) Setting up 2 or more gambling machines near primary or secondary schools;
(4) Accumulated illegal gains reaching 5,000 yuan or more;
(5) The cumulative amount of gambling funds reaches 50,000 RMB or more;
(6) The cumulative number of participants reaches 20 or more;
(7) Having been administratively penalized for setting up gambling machines, and within two years, sets up 5 or more gambling machines again;
(8) Having been criminally punished for gambling or operating a gambling den, and within five years, sets up 5 or more gambling machines again;
(9) Other circumstances where criminal liability should be pursued.
Article 303 of the Criminal Law
Whoever, for the purpose of profit, gathers people to gamble or makes gambling a profession shall be sentenced to fixed-term imprisonment of not more than three years, criminal detention, or public surveillance, and shall also be fined.
[1] Court Opinion
The prosecuting authority in this case initiated a public prosecution against the three defendants for the crime of illegal business operations. However, during the trial, the court, upon reviewing all evidence in the case, determined that the actions of the three defendants did not meet the constitutive elements of the crime of illegal business operations, for the following reasons:
1. Objectively, the actions of the three defendants did not constitute the illegal business operation of selling cigarettes. The crime of illegal business operations involving the sale of cigarettes requires the defendant to have engaged in the criminal act of selling cigarettes. The three defendants purchased cigarettes from supermarkets and placed them into cigarette-grabbing machines, setting the machines so that each insertion of one or two yuan coins granted one chance to grab a cigarette. The randomness and probability of grabbing a cigarette meant that these machines did not qualify as vending machines as alleged in the indictment. The probability of successfully grabbing a cigarette was accidental and gambling-like, largely dependent on the strength of the machine's claw current, which the three defendants adjusted and controlled based on the amount of revenue. Therefore, these machines were essentially not vending machines, and the value of the coins inserted by individuals attempting to grab cigarettes was not equivalent to the market value of the cigarettes obtained. Hence, the actions of the three defendants in using these machines to grab cigarettes did not fundamentally constitute the act of selling cigarettes.
2. Subjectively, the defendants had no intent to illegally operate cigarettes. The three defendants did not subjectively aim to sell cigarettes; rather, the cigarettes placed in the machines served merely as bait to lure others into participating in the grabbing activity. The profit model of the three defendants relied solely on instances where others failed to grab cigarettes, meaning the cigarettes were only a lure to entice others into gambling. Subjectively, the three defendants had no intent to sell cigarettes.
3. From the perspective of the infringed legal interest, the actions of the three defendants did not disrupt the normal market economic order. The cigarettes purchased by the three defendants were genuine, and they did not infringe upon the monopoly and franchise of tobacco products. Essentially, the actions of the three defendants undermined normal social management order and disrupted normal public order.
In summary, the actions of the three defendants do not constitute the crime of illegal business operations but should constitute the crime of operating a gambling establishment. The involved "cigarette-grabbing machines" are electronic gaming devices with coin-insertion and prize-dispensing functions. Participants in the cigarette-grabbing game could obtain cigarettes worth far more than the small amount of coins inserted, with randomness involved, which aligns with the characteristics of gambling. The three defendants arranged for supermarket operators to repurchase the grabbed cigarettes, thereby providing cash to others. The entire process constituted gambling activity, and the "cigarette-grabbing machines" had gambling functions. The defendants Li, Hou, and Su set up electronic gaming facilities with gambling functions and organized gambling activities by providing cash in exchange for prizes, meeting the constitutive elements of operating a gambling establishment. Their actions have already constituted the crime of operating a gambling establishment.
The Anqiu Court, after trial, sentenced defendant Li to three years' imprisonment, suspended for four years, and a fine of 30,000 RMB for the crime of operating a gambling establishment; defendant Hou to three years' imprisonment, suspended for three years, and a fine of 25,000 RMB; defendant Su to two years and six months' imprisonment, suspended for three years, and a fine of 20,000 RMB; and ordered the confiscation and surrender to the state treasury of the three defendants' illegal gains totaling 48,000 RMB.
[1] The author's perspective
The author believes that the core issue in this case is whether the act of using cigarettes in claw machines to lure others into participating constitutes illegal business operations or running a gambling establishment.
In this case, the three defendants regularly adjusted the claw's grip strength, i.e., the electric current, based on the difference between the coins inserted into the claw machines and the value of the cigarettes grabbed, namely the profit margin, to achieve optimal results. Initially, the cigarettes placed in the claw machines by the three defendants were genuine, but later they replaced some with cigarette box models to pass as cigarettes. This shows that placing cigarettes or cigarette models was merely a bait to lure others into participating. Those who participated also harbored a gambling mentality of risking small amounts for potential gains, and the cigarettes grabbed could be exchanged for cash at nearby supermarkets based on their value. The three defendants exploited this gambling mentality to organize and set up the 48 claw machines involved in the case.
In summary, the "claw machines" have gambling functions. The three defendants set up electronic gaming facilities with gambling functions and provided cash to others by repurchasing prizes, organizing gambling activities. This meets the constitutive elements of running a gambling establishment using gambling machines, and their actions constitute the crime of running a gambling establishment.
