CANADIAN CONTEST RULES/PRECEDENTS
Do you need contest rules/precedents
for a Canadian contest?
We offer many types of Canadian contest/sweepstakes law precedents and forms (i.e., Canadian contest/sweepstakes law precedents to run common types of contests in Canada). These include precedents for random draw contests (i.e., where winners are chosen by random draw), skill contests (e.g., essay, photo or other types of contests where entrants submit content that is judged to enter the contest or for additional entries), trip contests and more. Also available are individual Canadian contest/sweepstakes precedents, including short rules (“mini-rules”), long rules, winner releases and a Canadian contest law checklist. For more information or to order, see: Canadian Contest Law Forms/Precedents. If you would like to discuss legal advice in relation to your contest or other promotion, contact us: Contact.
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I work on a lot of contests and get a lot of Canadian contest (or for our U.S. friends “sweepstakes”) law questions. I thought it would be interesting to list the top 10 I regularly receive, with some general legal information around each. The following are the first five:
Is a skill-testing question required?
Skill-testing questions are a sort of Canadian thing. The short answer is that skill-testing questions are usually, but not always, required to operate a contest in Canada. They are commonly required and administered to potential winners before being declared a winner as one way to avoid the illegal lottery offences of the Canadian federal Criminal Code. In general, the Code prohibits games of chance (or mixed chance and skill) where contestants pay money or other consideration (i.e., something of value) to win a prize. Including a skill-testing question is one way to remove a contest from many of the lottery offences that include pure chance as an element of the offence (i.e., a way to remove some chance via the skill of a reasonably difficult question, typically a two-digit four-step math question). As such, including a skill-testing question makes a promotion one of “mixed chance and skill” so that if consideration is then also removed running a contest becomes low risk and a common strategy used by contest promoters to avoid the Code’s illegal lottery offences. To come back to the point that they are not always required, promoters sometimes operate “pure skill” contests (which are generally not addressed by the relevant lottery sections of the Code) or award prizes that are not listed in the relevant Code sections as one way to require a purchase as a condition of participation. The existing Canadian case law under the Code’s lottery sections (section 206) is, however, generally old and often inconsistent so determining whether a contest is one of “pure skill” and whether a purchase or other consideration can be required can be complex and uncertain. As such, cautious contest promoters generally remove two of the three elements of an illegal lottery to be safe (i.e., remove consideration through a “no purchase” entry option and include a “skill-testing question” to remove part of the chance element).
Can a purchase be required to enter?
Many promoters elect to include a “no purchase required” entry option for Canadian contests. This is because, as discussed in the above question, the illegal lottery offences of the Criminal Code generally prohibit games of chance (or mixed chance and skill) where contestants pay money or other consideration (i.e., something of value) to win a prize. That is, an “illegal lottery” generally speaking consists of three things: purchase/consideration, chance / mixed chance and skill, and a prize. Eliminating a purchase requirement (commonly together with including a skill-testing question) is a common strategy for avoiding these illegal lottery Code offences. Having said that, some promoters operate “pure skill” contests (which are generally not addressed in these illegal lottery offences) and/or award prizes that are not listed in the relevant section of the Code (section 206), such as cash or intangibles such as trips, as one strategy to require a purchase as a condition of entry. It is also worth noting that even if a purchase requirement is not included, requiring contestants to do something that may be seen as having value (i.e., consideration) can raise “consideration” issues for a contest. While the cost of a stamp to mail in an entry or navigating a website may be unlikely in reality to raise any serious consideration issues under the Code, more intensive contestant requirements when tied to a random draw may be more likely to do so (e.g., completing significant questionnaires, providing significant information or other onerous steps in order to participate in a promotion, etc.).
What are the main types of contests?
Generally speaking, there are two types of contests: “skill contests” or “consumer generated content contests” (i.e., where entrants/contestants are required to do something that requires skill in order to compete) and those where prizes are awarded randomly. Some of the types of “skill contests” include judged essay or art competitions, sporting events, sales competitions, etc. Some common types of random draw or selection contests include contests where winners are selected at random through a draw held by the promoter, instant win type winner selections, “prize vaults” where entrants are given numbers or codes to enter, seeded games (i.e., where a certain number of prizes are “seeded” in products), scratch-and-win type promotions where entrants see whether they have won a prize, etc. Sometimes promoters prefer random draw contests, which are generally relatively easy to prepare and run. Other promoters like to have contestants more engaged and producing more content (which can have a stronger promotional impact depending on the type of promotion). In any event, a wide variety of promotions can be run in Canada and are really only limited by promoters’ ingenuity and creativity assuming the basic Canadian legal requirements are met.
What Canadian laws apply to contests?
The basic legal requirements for contests in “common law Canada” (i.e., provinces and territories excluding Quebec) are to ensure that: promotional materials are not false or misleading (to comply with the misleading advertising sections of the Competition Act); short and long rules setting out the terms and conditions for the contest (to comply with mandatory statutory disclosure set out in the Competition Act and to have agreements with entrants); to avoid the Criminal Code’s illegal lottery offences (e.g., through “no purchase required” entry options and skill-testing questions as discussed above); and to take basic precautions to comply with Canadian privacy laws (e.g., consent for the collection of any personal information, disclosure of what the information will be used for, etc.). In some cases other rules or laws can be relevant, such as social media sites’ terms of use (e.g., Facebook’s promotions rules) or intellectual property laws (e.g., for contestants are generating original material as part of the contest, where third party images, trade-marks or logos are being reproduced, etc.). Also, Quebec has some specific requirements that must be met if a contest will be open to Quebec residents.
Does Canadian anti-spam legislation (CASL)
apply to contests/sweepstakes?
Canada’s federal anti-spam legislation (CASL) is often relevant when running contests and promotions in Canada, including if electronic distribution lists will be used to market the contest/promotion, the contest/promotion will include the collection of e-mails for marketing unrelated to administration of the promotion, if participants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or participants are asked or incentivized (e.g., with bonus contest entries) to “share” the contest/promotion with friends or family. Given the potentially severe penalties for violating CASL, which include administrative penalties of up to CDN $10 million, it is important to ensure that CASL is complied with for electronic marketing related to contests or other promotions open to Canadians. For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors. For CASL checklists and precedents that we offer for sale to comply with CASL, see: CASL Checklists and Precedents.
Are contests illegal in Quebec?
Why do contests commonly exclude Quebec?
I also often get asked whether contests are illegal in Quebec, why so many promotions exclude Quebec and what is required to run a contest in Quebec. First of all, contests are not illegal in Quebec – there are just a few additional requirements that need to be met in addition to those required for the rest of Canada. These include: filing the rules and creative copy 30 days before contest launch (though late filings are possible and fairly common); translating contest rules; paying a duty to the Regie in Quebec (which depends on where the contest is open, but if Canada-wide is 3% of prize value); and a filing on the completion of the contest with a notice of prize awards, winners, etc. There is also some specific language that needs to be included in contest rules for contests open in Quebec and it can also be prudent to run a contest concept by Quebec counsel before launching a promotion to check any other specific requirements in Quebec.
In part II I’ll chat about some other common Canadian contest questions I get: what do you need to legally run a contest in Canada?; are there any filing requirements or fees to operate a contest in Canada?; can a contest be operated globally (i.e., outside Canada) with one set of rules?; what is the difference between a contest and a lottery?; and what happens if we get it wrong (i.e., penalties, fines, etc.)?
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KEY LEGAL TIPS FOR RUNNING
A PROMOTIONAL CONTEST IN CANADA
The following are some key legal tips for operating a successful and legal contest in Canada:
CRIMINAL CODE
Avoid the illegal lottery offences of the Criminal Code (e.g., include a bona fide “no purchase necessary” entry option and skill element, such as a time-limited, multiple-step mathematical question for potential winners as a condition of awarding prizes).
SHORT RULES (MINI RULES)
Include short rules / mini rules with all of the required Competition Act disclosure requirements for point-of-purchase materials (e.g., print and in-store marketing, social media and Internet sites, packaging and labeling, television and radio spots, etc.).
For more information, see: Canadian Contest Law Forms/Precedents.
LONG RULES (OFFICIAL RULES)
Ensure that precise long rules (i.e., the official contest rules) are included that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems) and set out the terms of the contest as clearly as possible – for example, eligibility requirements, how to enter, prize descriptions, number and value of prizes, draws and award of prizes, odds of winning and indemnifying and releasing the contest sponsor and any co-sponsors or prize sponsors.
Contests are contracts, and so they should be as accurate, clear and precise as possible in the event issues arise.
For more information, see: Canadian Contest Law Forms/Precedents.
WINNER RELEASE FORMS
Consider using winner release forms for contest winners.
While not required by law in Canada, winner release forms are almost always used by contest sponsors to have winners confirm that they have complied with all contest rules and release the sponsor from legal liability. Signing and returning winner releases is also commonly included in contest rules as a condition of awarding a prize.
Winner release forms are particularly important for contests in which there may be higher risk (e.g., where the contest involves high value prizes or a trip prize).
For trip contests, sponsors are generally advised to use winner releases for both winners and any travel companions (and guardian releases for any minor companions).
For more information, see: Canadian Contest Law Forms/Precedents.
FALSE OR MISLEADING ADVERTISING
Ensure that advertising and marketing materials are not false or misleading (i.e., comply with the general civil and criminal misleading advertising sections of the Competition Act, under sections 74.01 and 52).
In this regard, contests in Canada must comply not only with stand-alone contest provisions of the Competition Act (under section 74.06) but also with the general misleading advertising sections of the Competition Act.
It is particularly important to ensure that the marketing materials also match the contest rules and that all material aspects of the contest (e.g., number and type of prizes, prize values, how to enter and win and any conditions/limitations) are accurately described in the short rules, long rules and marketing materials.
CANADIAN FEDERAL ANTI-SPAM LAW (CASL)
Comply with Canada’s federal anti-spam legislation (CASL).
CASL is often relevant when running contests in Canada, including if electronic distribution lists will be used to market the contest, the contest will include the collection of e-mails for marketing unrelated to administration of the contest, if entrants’ e-mail addresses will be shared with third parties (e.g., related entities or affiliate marketers) or entrants are either required or incentivized (e.g., through additional entries) to “share” the contest with friends or family.
Given the potentially severe penalties for violating CASL, which include AMPs of up to CDN $10 million, it is very important for contest sponsors to ensure that they comply with CASL for any electronic marketing related to promotional contests open to Canadians.
For more information about contests and CASL, see: Contests and CASL and CASL Compliance Errors.
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CASL Compliance Checklists and Precedents: For information about the CASL compliance checklists and precedents we offer, see: CASL Compliance Checklists and Precedents.
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INTELLECTUAL PROPERTY CONSENTS
Consider whether consents are needed (and if necessary obtained) to reproduce third-party intellectual property – for example, trade-marks, logos, etc. – or to transfer ownership in contest materials – for example, where contestants create original material as part of the contest.
Contest rules in Canada commonly include rights (e.g., a licence) for the sponsor to use information and content contributed by entrants and if entrants will be contributing original content (e.g., photographs, essays, etc.) it is also a good practice for sponsors to include guidelines relating to their rights to use (or reject) any entrant contributed content.
For more information, see: Guidelines for Consumer Generated Content Contests.
U.S. LEGAL ADVICE IF OPEN IN THE U.S.
Obtain U.S. legal advice if the contest will be open to U.S. residents or limit the contest to only Canadian residents.
SOCIAL MEDIA PLATFORM RULES
Comply with social media sites’ terms of use if using social media to promote or host a contest (e.g., Facebook’s Promotions Rules).
Also ensure that appropriate disclosures are made in all social media marketing (i.e., include short rules).
For more information, see: Contests and Social Media.
OTHER COMPETITION LAW
AND ADVERTISING LAW RULES
Consider whether other competition or advertising law rules may apply to a contest. For example, in addition to the stand-alone contest provision (section 74.06), the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising (sections 52 and 74.01) and telemarketing that involves prizes.
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SERVICES AND CONTACT
We are a Toronto based Canadian competition law and advertising law firm who helps clients in Toronto, across Canada and the United States practically navigate Canada’s advertising and marketing laws and offers Canadian advertising/marketing law services in relation to print, online, new media, social media and e-mail marketing.
Our Canadian advertising/marketing law services include advice in relation to anti-spam legislation (CASL), Competition Bureau complaints, the general misleading advertising provisions of the federal Competition Act, Internet, new media and social media advertising and marketing, promotional contests (sweepstakes) and sales and promotions. We also provide advice relating to specific types of advertising issues, including performance claims, testimonials, disclaimers, drip pricing, astroturfing and native advertising.
For more information about our services, see: services
To contact us about a potential legal matter, see: contact
For more information about our firm, visit our website: Competitionlawyer.ca
