Background

This article provides a brief overview for business entrepreneurs who are considering entering into the gaming industry in Thailand. The first part of the article will discuss industry overview and business opportunities in Thailand, then, it will discuss legal principles and unique regulations pertaining to games by focusing on gameplay mechanics, distribution, and transmission of game contents for operators/distributors of mobile games or online/offline games (excluding arcade games) in Thailand.

I. Overview of Gaming Industry and Business Opportunity in Thailand

Similar to the trend around the world, the gaming and e-sport industry in Thailand is booming. According to the survey conducted by Thailand E-Sport Federation, 41% of the Thai population plays games of some sort, e.g. mobile, PC, or console. In 2019, the value of the gaming industry in Thailand reached 22 billion THB (approximately 710 million USD) which is a 13% increase from the previous year, and ranked No. 2 in terms of growth in the industry among ASEAN countries1 . Emergence of many international e-sport tournaments, recognition of e-sports as a category of sport by the Sport Authority of Thailand, the release of Thai-subtitled versions of major game titles, such a Cyberpunk 2077,/ and The Last of Us Part II,/, and opening of gaming industry and e-sport-related curriculum in many Thai universities can be seen as the response of the industry to the expanding player base in the country.

In terms of a business venture, Thailand is relatively open and willing to grant support to entrepreneurs in the gaming industry; generally, without obstacle, due to insufficient infrastructure or explicit interference from the state. Examples of possible business ventures related to the gaming industry are as follows:

  • Game developer/game studio, either an original content creator or subcontracting
  • Gaming hardware manufacturing
  • Game publishers and localization
  • Game distributors (either by physical or digital copies)
  • Game marketing agents or aftermarket service provider

Foreigner business operators can conduct all of above-mentioned activities either by (i) operating domestically through a subsidiary or branch office, or (ii) operating offshore but outsourcing certain supporting activities, such as marketing, to Thai companies. However, it is prudent for foreign business entrepreneurs to consider each option carefully by taking into account investment-related laws, e.g., investment incentives, foreign business restriction, tax, intellectual property, and exchange control, etc., together with other commercial factors.

It is also noteworthy that game developers (game studios) and gaming hardware manufacturers may be eligible to receive investment incentives under both the Board of Investment (BOI), and/or the Easter Economic Corridor (EEC), which will grant numerous tax and non-tax incentives to such business.

II. Legal Principle and Unique Regulations Pertaining to the Gaming Industry in Thailand

Although investment in the gaming industry in Thailand can be done through various forms of business, and basically free of obstacles, as discussed above, Thailand has some unique legal principles that players in the industry should be aware of.

1. Gambling Act of 1935 (the "Gambling Act")

The Gambling Act is often cited as the primary law governing gaming in Thailand due to the nature of the said Act that regulates "game playing" as well as regulating lotteries in general. In this regard, the definition of "gambling" is not defined within the Gambling Act, and, in principle, games which are subject to the regulation under the Gambling Act must be games or acts of betting listed as "Type A Gambling" or "Type B Gambling" in the annexes of the Gambling Act.

Gaming software and provision of gaming services on any platform are not listed as either Type A or Type B Gambling, thus, gaming software and provision of gaming services are not subject to any license under the Gambling Act. There is also a Supreme Court judgment which opined that arcade machines, which are solely used for entertainment purposes, and with respect to which the players do not make any bet by using the score of the game, shall not be considered as gambling machines under the Gambling Act2 .

Although gaming software and related services in general are not subject to any license requirements due to the reasons mentioned above, the Gambling Act is now returning into the subject of the discussion due to the introduction of loot box or gacha (collectively referred to hereinafter as "Loot Box") in mobile games and online games. Loot Box is a system where players receive in-game items by lottery, and, in many cases, the players must pay a coupon fee in order to get a better chance of receiving superior items or characters than those provided free of charge. This manner of gameplay may share similar nature to a "lottery", which requires a license to operate under Section 9 the Gambling Act.

Considering that the intention of the Gambling Act is to regulate the use of gambling for commercial promotion and to prevent the players from potentially gambling away all of their money, Loot Box can be put into question from the regulator's standpoint because it induces consumers to invest money for an unforeseeable prize, i.e., in-game items. However, from a legal standpoint, the application of the Gambling Act to Loot Box is still questionable as the characteristic of "lottery", as regulated under Section 9, must be "any game of chance promising money or other benefits to any of the players", whereas, virtual items in games cannot be financially appraised like ordinary property. Moreover, considering the fact that the Gambling Act was enacted in 1935, with the latest amendment in 1962, it is unlikely that the provision of the Gambling Act is intended to regulate Loot Box.

Due to this lack of updated regulation less attention paid on this issue by relevant authorities, the legality of Loot Box under the Thai legal system still remains unclear and gives an opportunity for many game providers/publishers to provide Loot Box games in Thailand with less of a legal burden.

2. Film and Video Act of 2008 (the "FVA")

Game software to be imported and sold in Thailand is subject to the inspection of its contents by the Film and Video Censorship Committee (the "Censorship Committee") under Section 47 of the FVA3 . Under the said Act, video games can be classified as one type of "video", meaning "a material which contains recording of visual images or visual images and sounds which can be continuously shown as moving pictures in the form of games ...", and, thus, is subject to the inspection thereof.

The Censorship Committee will inspect gaming software and ban any content which is against public order and good moral of the citizen, or any content which scrutinizes public security and/or the dignity of Thai nation. If no such forbidden content is found, the Committee shall grant the permission to sell the game software in Thailand4 . Moreover, business entrepreneurs who engage in the business of selling game software are subject to obtaining a license to sell gaming software under Section 54 of the FVA.

However, it must be noted that the regulation under the FVA, as mentioned above, will be limited to software which is recorded in physical mediums, e.g., disc or cartridge. This is because the definition of "video" in Section 4 of the FVA is limited to "material with recording of visual images". Although there is no official ruling from the relevant authority, based on this definition, it is understandable that gaming software which is provided through a cloud server, e.g., streaming service or mobiles game, and games purchased in digital copy will not be subject to censorship inspection under the FVA. Nevertheless, transmission of gaming software with depiction of graphic obscenity or sensitive content could be subject to penalty under Computer Crime Act of 2007 (which will be discussed below) and may pose a threat of legal scrutiny to the software distributor, which could lead to the decision by the distributor to pull the content from both physical and online platforms.

3. Computer Crime Act of 2007 (the "CCA")

Under Section 14 of the CCA, a person who uploads illegal data via computer network, e.g., uploading obscenity, deceptive information, information related to national security and terrorism offences under the Penal Code, etc., may be subject to imprisonment not exceeding five (5) years, or a fine not exceeding 100,000 THB (approximately 3,200 USD) or both. Not only the person who uploaded the illegal information, under Section 15 of the Company Act, any service provider who provides the communication channel via online, or storing such information on its server is also subject to the same if it cooperates, consents, or supports the import of illegal data onto the network unless it can prove that it has immediately deleted the illegal data under Section 14, thereby complying with the guideline for warning and take down measures as announced by the Ministry of Digital Economy and Society (MDES)5 .

In the recent years, many online games provide a social network function, such as multi-player mode or chatroom for players during the gameplay. Although the liability caused by uploading any illegal information or data should principally belong to the transmitters of such message, i.e., the players, game service providers should be aware that, as the provider of a communication medium, it may face the risk of penalty under Section 15 the CCA, if it neglects to take down any illegal data from the game.

III. Conclusion

Despite the growth of the gaming industry in Thailand, laws and regulation regarding the gaming industry are somewhat delayed to catchup with the latest trend, i.e., the laws give more emphasis to censorship of content with less focus on new mechanisms and new distribution methods in gaming, such as Loot Box and online games. The recent debate in Thailand regarding the regulation of e-sport, e.g., banning of first-person shooter (FPS) competition in school and age restriction of e-sport athletes6 , could be seen as the government's initiation to regulate gaming in a more modern context. Nevertheless, the development of legal infrastructure to straighten out the rules pertaining to the gaming business in Thailand still requires more deliberation and departure from regulations regarding game contents into industry-oriented regulations.

Footnotes

1 https://www.salika.co/2019/10/29/thailand-gaming-market-rising-2019/

2 Supreme Court Judgement No.525-536/2540 (1997))

3 Section 47 of the FVA. A Video which will be exhibited, rented, exchanged or distributed in the Kingdom shall be reviewed and approved by the Film and Video Censorship Committee. The application and approval shall be in accordance with the rules, procedures and conditions prescribed by the Committee and published in the Government Gazette.

4 Censorship Committee Notification re: Criteria for Inspection of Video and Advertising Media dated 26 August 2009, and the amendment thereof.

5 MDES Notification re: Criteria, length and procedures to terminate the distribution of data or delete data by the competent officer and the Service Provider dated 21 July 2017

6 Dashing the gamer dream -Potential legislation may prevent access and opportunity (https://www.bangkokpost.com/business/1950348)

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.