Promotional contests are a great way to attract consumers’ attention to your brand and your products. For U.S. marketers and companies, allowing Canadian residents to participate in promotional contests is a savvy way to increase brand exposure. However, despite our countries’ many commonalities, Canadian contest law has unique differences to U.S. contest law.
Canadian contests must comply with provisions of the Criminal Code, Competition Act, and, if Québec residents may enter, Quebec’s Act Respecting Lotteries, Publicity Contests and Amusement Machines. Also, if sponsors are using personal information collected during the contest for any secondary purpose, then the contest must also comply with Canada’s federal privacy law called the Personal Information Protection and Electronic Documents Act. If you are sending email or text messages, CASL, our anti-spam law, may also apply. Here are the top things to keep in mind when planning to run a contest in Canada. Depending on the mechanics of your contest (for example, if minors may enter), further legal considerations may apply.
The information in this article is for information only. It is not, and should not be taken as, legal advice. You should not rely on, or take or not take any action, based upon this information. Professional legal advice should be promptly obtained.
Include a Skill-Testing Question
In Canada, games of pure chance are prohibited as illegal lotteries under our Criminal Code. This includes contests where prizes are given away through random draws, as well as those where prizes are randomly distributed through game cards or on packages (e.g. “scratch-and-win” and “instant win” games).
For contests of chance, making prize redemption conditional on answering a skill-testing question turns a game of pure chance into a (legal) game of mixed chance and skill. Generally, a time-limited, multi-step and multi-operational mathematical skill testing question, answered without assistance, is sufficient.
It should be noted that contests of pure skill, such as writing and photographic contests judged by a judge or panel of judges, do not require a skill-testing question, although many include one anyway as a precaution. One would still be necessary if there is a random component to reduce the number of entries before progressing to the judging stage. Skill contests require other disclosures, such as clear communication of the judging criteria and the weight amounted of each criterion and, in the event of a tie, the mechanism to break the tie.
“No Purchase Necessary”
Under our Criminal Code, it is also an illegal lottery to award prizes by any game of chance, or mixed skill and chance, where the entrant must pay money or other valuable consideration to play.
What constitutes “consideration” can be a difficult analysis. Although a contest may not require an entrant to purchase a product to enter, it may require the contestant to take some other action that has value, such as watching a lengthy video (i.e. time) or requiring the entrant to complete an extensive survey (i.e. personal information). Generally speaking, where an entrant has to give up something of value or do something onerous to enter a contest, there is a risk that this will be construed as “consideration.”
The simplest way to avoid the consideration prohibition is to include a “no purchase necessary” mode of entry, such including an address allowing consumers to mail-in for an entry without the need to watch a video or complete a survey. However, participants who choose the “no purchase necessary” route must not be unfairly disadvantaged compared to those entering through the other route (e.g. those who purchase the product have an opportunity to obtain additional entries, while those who mail-in do not).
Don’t Forget About Québec!
International clients often exclude Québec residents from their contests. However, Québec makes up about 25% of Canada’s population. Although there are additional steps to running a contest in Québec, they are not onerous. It means dealing with the Régie des alcools, des cours et des jeux (“Régie”) by registering the contest with the Régie, making prescribed disclosures in the rules, having the rules and any related advertising translated to French, paying a duty to the Régie (which is a small percentage of the value of the prize pool and varies depending on the population eligible to win the prizes) and, in certain circumstances, posting security, which is refunded upon the conclusion of the contest and the distribution of the prizes. Likely the most significant costs are associated with the translation to French. Thus, for a few extra steps, which are not as daunting as they may initially seem, your brand could gain exposure to a significant portion of Canada’s population by including Québec residents.
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