Police said on Monday that they had arrested seven people on suspicion of conspiracy to control others for prostitution, criminal intimidation and blackmail after young men were coerced into having sex with each other on camera.
The force said four victims they know of, aged between 20 and 31, signed contracts with a bogus sex film company after being recruited via a social media platform popular with gay people.
The victims were promised at least HK$1,000 an hour for live performances in hotel rooms that were to be watched by a small number of clients.
When the victims weren't paid after several performances they tried to quit, only to be blackmailed by the gang who said videos of the sex acts would be published online, police said.
Breaking the contracts also incurred heavy penalties, officers said.
"Another contract term was that, if those watching the live shows want to have sex with the actors, they cannot refuse. If they did, they'd also have to pay a fine," said police superintendent Chen Chi-cheong.
Police said the four victims didn't have sex with the customers, but they believe other men did and they should contact the force.