A report in UK newspaper The Guardian tells the story of Liu Dali (not his real name) -- a 54-year old former prison guard who was jailed for three years in 2004 for "illegally petitioning" the central government about local corruption. Liu discovered during his time behind bars at the Jixi re-education-through-labor camp in Heilongjiang province that prisoners were not only being forced to do manual labor by day, but were also made to play online games and farm gold in MMOs such as World of Warcraft by night.
"Prison bosses made more money forcing inmates to play games than they do forcing people to do manual labor," said Liu, speaking with The Guardian. "There were 300 prisoners forced to play games. We worked 12-hour shifts in the camp. I heard them say they could earn 5,000-6,000rmb [$770-$924] a day. We didn't see any of the money. The computers were never turned off."
Liu noted that all prisoners had work quotas to complete, whether they were undertaking manual labor or slogging away virtually in Azeroth. Prisoners who fell behind would be physically punished, either by being forced to stand with their hands raised in the air, or being beaten with plastic pipes.
In 2009, the Chinese central government made it illegal for businesses without licenses to trade in virtual currencies. But Liu believes that many prisons across the northeast of China are still forcing detainees to play games. And it's not just in prisons -- virtual sweatshops employ workers to play games for up to 12 hours a day with no rest throughout the year.
"These are not just problems for this industry, but they are general social problems," said Jin Ge, a researcher from the University of California San Diego who has been researching Chinese gold farming. "The pay is better than what they would get for working in a factory. It's very different. The buyers of virtual goods have mixed feelings [...] it saves them time buying online credits from China."