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Yes, it does. It's really simple: if there are no costs for the players, then the mud can be legitimately advertised to those players as 'free' - because it is indeed 'free' for those people.
If the game does have costs for the players, then it is not 'free' for players, and shouldn't be advertised as such. The fact that some players can pay for others has no bearing on this - any more than a pub could advertise its beer as 'free' on the basis that some people buy drinks for their friends.
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