Game Gacha & Virtual Currency Compliance: Probability Disclosure, Pity System & Legal Red Lines

The Gacha/Loot Box mechanism is a core monetization strategy in China’s gaming industry. However, this mechanism faces strict administrative oversight and consumer protection requirements. This article systematically outlines the key legal compliance points for random draw services.

1. Legal Framework & Regulatory Basis

The legal regulation of random draw services in games is primarily based on:

• Administrative Measures for Online Game Management: Clearly defines the forms and scope for online game operators to issue virtual currency
• Notice on Regulating Online Game Operations and Strengthening Post-Event Supervision: First systematic regulation on probability disclosure and pity mechanisms
• Measures for the Administration of Online Trading: Regulates consumer rights protection in virtual goods transactions
• Consumer Rights Protection Law: Protects players’ right to know and fair dealing

2. Probability Disclosure: Format & Content Requirements

Disclosure Obligation

According to the Notice on Regulating Online Game Operations, online game operators must prominently display the exact probability of randomly drawn items within the game.

Format Requirements

1. Must Use Percentage: Vague terms like “High,” “Rare” are not permitted
2. Precise to Two Decimal Places: For example, “0.98%” rather than “approximately 1%”
3. Distinguish Displayed vs. Actual Probability: Some games distinguish between “algorithm probability” and “actual output probability,” but the regulatory trend requires disclosure of the final probability that affects players

Common Violations

• Disclosing only on a buried page of the official website, not prominently within the game
• Only disclosing probability for partial draw pools
• Probability figures incorrect or inconsistent with actual algorithms
• Using “pseudo-random” mechanisms causing systematic deviation between actual and disclosed probabilities

3. Pity System: Mandatory Requirements

Applicable Scope

Pity mechanisms apply to all core in-game items obtained through random draws, including but not limited to:

• Character/Hero draws
• Weapon/Equipment draws
• Costume/Skin draws

Pity Rules Requirements

1. Clear Pity Counter: Players must be able to clearly see remaining draws until pity is triggered
2. Pity Cap: There should be a clear upper limit on pity trigger count within a single draw system (typically 80-150 draws)
3. Pity Content: Pity items should be the highest rarity items in that draw system
4. Pity Inheritance: If pity counters reset after a pool update, players must be clearly informed before the update

4. Legal Classification of Virtual Currency

Currency Attributes & Restrictions

In-game virtual currency (such as Diamonds, Gold, Coupons) is legally classified as virtual goods, not legal tender. Regulations impose the following restrictions:

1. One-Way Exchange Restriction: Virtual currency can typically only be exchanged for in-game services or goods, not for legal tender
2. Validity Period Restriction: Virtual currency can have an expiry date, but players must be clearly informed at the time of purchase
3. Refund Restriction: Except for special circumstances, purchased virtual currency does not support refunds

Separate Free & Paid Currency

Compliant practice is to set up two types of virtual currency:

• Free Currency: In-game drops, quest rewards
• Paid Currency: Purchased with real money

The value, acquisition method, and usage scope of the two currency types should be clearly distinguished to avoid confusion.

5. Inducement Consumption Red Lines

Prohibited Practices

• Absolute Terms: Strictly prohibited from using absolute promotional language such as “Guaranteed,” “100% Obtain,” or “Highest Quality”
• False Discounts: Fabricating original prices or discounts
• Inducement Descriptions: Excessive marketing leveraging player speculation, such as “Rare item, only this once”
• Minor Inducement: No content inducing minors to overspend

Consumption Warning Requirements

1. Moderate Consumption Warning: Display “Rational Consumption” warning prominently on recharge pages
2. Minor Consumption Restrictions: Must provide minor consumption inquiry and refund channels
3. Single Transaction Limits: Single recharge should have an upper limit (typically recommended not exceeding 648 RMB)

6. Compliance Checklist

Conclusion

Game Gacha and virtual currency compliance is a critical component of game ISBN applications and daily operations. It is recommended that developers introduce compliance review when designing draw systems to avoid remediation orders or even removal from stores due to mechanism violations post-launch.

Disclaimer: This article is based on regulatory policies at the time of writing and does not constitute legal advice.