The sentence of military service is not entirely as a punishment to orcs, but as a benefit to Regalia. Orcs are indeed excellent warriors, and enjoy it, which is why this condition exists. Of course the orc will take military service if given the choice. What is the result? Regalia has a small detachment of orcish beserkers ready to smash some heads. They will enjoy it, no worries about desertion. They will do their job well. And they will be at the front, no doubt about it, spearheading any attack or defense, so they will die first, at a much lower cost then humans. A human is less effective under normal circumstances then an orc, so the orcs are the ideal front line shock troops. There is no punishment here, it is however practical from a military perspective.

The next question might be, why do this with orcs only? Why not elves too, I mean, they are the superior archers. The answer: elves and other species are less willing to fight. They don't want to be there. They will fight if they must, but at reduced effectiveness until their life is in direct danger, if then, and they will desert at first opportunity, which is more often then in a prison. So orcs can do this.