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 legal 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.
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For more Canadian advertising/marketing, competition, contest and CASL (anti-spam) law terms and phrases, see: Advertising Law Terms, Competition Law Terms, CASL Law Terms – A-M, CASL Law Terms – N-Z, Contest Law Terms – A-C, Contest Law Terms – D-H, Contest Law Terms – I-M and Contest Law Terms – T-Z.
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The following are some key Canadian contest/sweepstakes law related terms (N-S):
“No purchase required entry option” / “alternative means of entry (AMOE)”.
Based on the Canadian federal Criminal Code‘s prohibitions of illegal lotteries under section 206, contest/sweepstakes sponsors in Canada commonly remove either the consideration element by offering a “no purchase necessary” or “alternative means of entry” (AMOE) entry option, chance element (e.g., by adding a skill element, for example making the contest a pure skill skill contest or including a skill-testing question requirement). This is because under many of the illegal lottery offences under section 206 of the Criminal Code, it is a criminal offence to run pure chance games where a purchase or other consideration (i.e., something of value) is required as a condition of entry by contest entrants. Determining what constitutes “consideration” and “chance” can, however, be complex in some case. As such, sponsors who want to require a purchase as a condition of entry into a contest in Canada or not include a skill component should obtain legal advice.
“Or otherwise disposes of any product or other benefit by any mode of chance … whatever …”
Under section 206(1) of the Competition Act (promotional contests), certain disclosures are required to be made by contest promoters that “for the purpose of promoting, directly or indirectly, any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed skill whatever.” In R. v. Sears Canada Inc. (1989), 28 C.P.R. (3d) 248 (Ont. Dist. Ct.), the court interpreted a substantially similar version of this phrase under the former section 37.2(1) of the Act in the context of “mini casino” cards offering a chance to save 10%, 15%, 20% or 25% off Simpsons purchases, without making adequate and fair disclosure of the number of prizes or that 90% of the cards did not include a discount, as follows: “The benefit here was the discount, in the percentage uncovered by the removal of a tab. Chance determined which of the two kinds of cards was received and which tab was removed. The essence of the promotion was therefore the disposal of benefits by a mode of chance. The offence is that Simpsons did not disclose a fact within its knowledge that affected materially the chances of winning.”
“Prize-pitch”, “prize-promotion”, “gimme gift” or “cheap gift” schemes.
Canadian Anti-Fraud Centre: “One of the most common scams is the “prize pitch”. Consumers are told they have been specially selected to win a prize, or have been awarded one of three or two of five prizes. These prizes usually include cash or a vehicle. You must purchase a product and pay in advance to receive your prize. These products may include “coin collections”, personalized pen sets, etc. The products are generally cheap or overpriced, but may sound valuable over the phone.”
Canadian Department of Justice, Report of the Canada – United States Working Group on Telemarketing Fraud (Updated December 1, 2011): “Telemarketers ‘guarantee’ that the victims have won valuable prizes or gifts, such as vacations or automobiles, but require victims to submit one or more payments for non-existent shipping, taxes, customs or bonding fees, or anything else the offender thinks plausible. Some schemes never provide their victims with any prize or gift, while others provide inexpensive items, often called ‘gimme gifts’ by U.S. telemarketers and ‘cheap gifts’ by Canadian telemarketers.”
RCMP, Prize Pitch (Lottery) Scams: “The classic prize pitch scam involves victims receiving notification by post, phone, or e-mail indicating they have won a prize (monetary or other valued item). However, in order to collect the prize the victim is required to pay various fees or taxes in advance. Victims either never hear from the organization again or receive further requests for money. If you have won a prize in Canada there are no fees or taxes to be paid.”
Promotional contest.
Promotional contests in Canada are largely governed by the federal Competition Act (statutory disclosure and misleading advertising rules), federal Criminal Code (provisions governing “illegal lotteries” that must be avoided), federal and provincial privacy legislation (relating to the collection of entrant personal information), the common law of contract (contests have been held to be contracts) and intellectual property laws (e.g., relating to the transfer of original artistic materials, for example in skill contests, or reproduction of 3rd party logos, trade-marks or other intellectual property not owned by a contest organizer). In addition, Quebec has a separate regime governing contests, regulated by the Régie des alcools, des courses et des jeux.
With respect to the Competition Act, subsection 74.06 makes it a reviewable (i.e., civil) matter, subject to civil penalties, to operate a contest without certain required disclosure, to unduly delay the award of prizes and also governs the selection of participants and distribution of prizes:
“A person engages in reviewable conduct who, for the purpose of promoting, directly or indirectly, the supply or use of a product, or for the purpose of promoting, directly or indirectly, any business interest, conducts any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise disposes of any product or other benefit by any mode of chance, skill or mixed chance and skill whatever, where: (a) adequate and fair disclosure is not made of the number and approximate value of the prizes, of the area or areas to which they relate and of any fact within the knowledge of the person that affects materially the chances of winning; (b) distribution of the prizes is unduly delayed; or (c) selection of participants or distribution of prizes is not made on the basis of skill or on a random basis in any area to which prizes have been allocated.”
Random or ‘random draw’ contest.
Contests generally fall into two categories: skill contests (e.g., judged story-writing, photography or other skill competitions) and random contests (e.g., contests where winners are selected by random draw). Random contests can include random draws, seeded games (e.g., where prizes may be found under bottle caps, etc.), scratch-and-win cards, instant win games online or so-called “match and win” games (in which participants collect game pieces for a game, puzzle, etc.).
A “random draw” type of contest is one in which winners are chosen by a random draw from all eligible entries received (as opposed to, for example, a skill contest, where a contest entrant may have to compete with other entrants to win prizes).
B. Pritchard & S. Vogt, Advertising and Marketing Law in Canada, 4th ed. (Toronto: LexisNexis, 2012): “Contests can be divided into two broad categories: skill contests and contests where prizes are awarded randomly. Until recently, skill contests – where winners are selected by experienced judges based on the contestants’ skill at story-writing, photography, etc. – were much less common. Contests where winners are chosen at random include: sweepstakes where prizes are awarded by random draw; seeded games (including Coke’s ‘under the bottle cap’ promotions and Tim Hortons’ ‘Roll Up The Rim To Win’), where prizes are randomly seeded on game cards or on-pack, and participants must scratch, unpeel or otherwise reveal the prize area to discover whether they have won a prize; online instant win games where consumers enter a code number (usually obtained on-pack); and ‘match and win’ games where participants must collect game pieces to spell specific words or match the pieces of a puzzle.”
“Short rules” or “mini rules”.
Canada’s federal Competition Act requires that certain disclosures be made when conducting “any contest, lottery, game of chance or skill, or mixed chance and skill, or otherwise [disposing] of any product or other benefit …” Key Competition Act requirements include: (i) disclosing the number and approximate value of prizes, (ii) disclosing the area (or areas) to which they relate and (iii) any fact that may materially affect the odds of winning. The Competition Act also prohibits contest organizers from “unduly delaying” the award of prizes. Based on these requirements, most contest organizers provide short rules / mini-rules in all point-of-purchase materials regardless of media (i.e., in all print, online and other electronic media), with long rules (i.e., official contest rules) available on request and commonly posted on the sponsor’s website. Point-of-purchase disclosure (short rules) commonly includes both the required statutory disclosure and other key contest elements. While short, and usually straightforward, it is important that the mandatory statutory disclosure be drafted precisely and correctly. It is also important that the timing for the launch of a contest and accompanying promotional materials ensure that the necessary disclosure is included in point-of-purchase and similar marketing materials where entrants first see a contest promoted.
Skill.
R. v. Robert Simpson (Regina) Ltd., 1958 CarswellSask 66, 121 C.C.C. 39 (Sask. C.A.), at para 30, per Gordon J.A.: “The meaning which I think should be assigned to the word [skill] as used in the [Criminal Code] is as follows: ‘Capable of accomplishing something with precision and certainty; practical knowledge in combination with ability; cleverness and expertness.”
[Skill cannot be a mere sham for what is an actual lottery]: Brown v. Bonnycastle, [1936] 1 D.L.R. 295, 65 Can C.C. 57, 43 Man. R. 476: “One is at a loss to understand how it can be considered that a competition which, to be legal under the subsection, must depend on skill or judgment on the part of the competitor, can be based on a study or comparison of 10,000 signatures, which are automatically written, and in which no skill or judgment, solely referable to and evoked by the competition, is exercised. ‘Skill or judgment’ carry their on connotation, being the Court’s formula for drawing a dividing line between what is and what is not a lottery. It is, therefore, clear that the words do not permit of evasion by subterfuge and that skill or judgment must be called for by the competition and exist in an active and subjective sense.”
R. v. Wallace (1954), 109 C.C.C. 351 (Alta S.C.), per Ford J.A., citing Roe v. The King [1949], 2 D.L.R. 785 at p. 789 (S.C.C.): “The case of Roe v. The King, supra (known as the Red River Barrel case), was also referred to. It was held that it required an element of skill to estimate the time that a 45-gallon capacity barrel would take to float the distance of 105 miles from Emerson to the Norwood Bridge in Winnipeg and surely that is so. Everyone who purchased a ticket was entitled to compete.”
Skill contest / game of skill.
A type of contest in which winners are chosen by skill not chance. In Canada, illegal lottery offences under the federal Criminal Code prohibit, among other things, awarding property by chance or awarding goods, wares or merchandise by chance or mixed skill and chance, where entrants pay to play (or provide other valuable consideration). As such, pure skill contests can be one way to include a purchase requirement for a promotion without violating the Criminal Code.
U.S. Federal Trade Commission: “Skill contests [are] puzzles, games or other contests in which prizes are awarded based on skill, knowledge or talent – not on chance. Contestants might be required to write a jingle, solve a puzzle or answer questions correctly to win.”
B. Pritchard & S. Vogt, Advertising and Marketing Law in Canada, 4th ed. (Toronto: LexisNexis, 2012): “Contests can be divided into two broad categories: skill contests and contests where prizes are awarded randomly. Until recently, skill contests – where winners are selected by experienced judges based on the contestants’ skill at story-writing, photography, etc. – were much less common. Contests where winners are chosen at random include: sweepstakes where prizes are awarded by random draw; seeded games (including Coke’s ‘under the bottle cap’ promotions and Tim Hortons’ ‘Roll Up The Rim To Win’), where prizes are randomly seeded on game cards or on-pack, and participants must scratch, unpeel or otherwise reveal the prize area to discover whether they have won a prize; online instant win games where consumers enter a code number (usually obtained on-pack); and ‘match and win’ games where participants must collect game pieces to spell specific words or match the pieces of a puzzle.”
R. v. Ross, [1968] S.C.R. 786, at para 13: “Among dictionary definitions, the following appear to be of some interest: Funk & Wagnalls New Standard Dictionary: ‘The expression games of chance is used to describe those contests the outcome of which is largely governed by chance, as in cards, dice and gambling games generally; and in opposition to games of skill the result of which depends largely upon the dexterity of the contestant.’ Bouvier’s Law Dictionary. Vo Gaming: ‘There are some games which depend altogether upon skill, others which depend upon chance, and others which are of a mixed nature. Billiards is an example of the first; lottery, of the second; and backgammon, of the last’”.
R. v. Johnson (1902), 6 Can. C.C. 48, 14 Man. R. 27 (Man. K.B.), as summarized by the court in R. v. Robert Simpson (Regina) Ltd., 1958 CarswellSask 66, 121 C.C.C. 39 (Sask. C.A.), at para 14: “The judgment of the Court [in R. v. Johnson] was delivered by Killam C.J., who stated that the modus operandi advertised and practised was that each purchaser from the accused of goods to a certain amount was given a ticket and upon drawing by chance among the holders of such tickets the winner was to get the horse, buggy and harness if he should shoot a turkey at a distance of 50 yds. In 5 shots. It was stated in the case that the evidence showed that any person could easily shoot the turkey under the circumstances; in other words, that no skill was required. In giving judgment Killam C.J. stated it was a question for the jury whether the interposition of the shooting was intended as a real contest or as a device for covering up a scheme to dispose of the property by lot and upon the evidence the jury was justified in finding as they did.”
[Skill cannot be a mere sham for what is an actual lottery]: Brown v. Bonnycastle, [1936] 1 D.L.R. 295, 65 Can C.C. 57, 43 Man. R. 476: “One is at a loss to understand how it can be considered that a competition which, to be legal under the subsection, must depend on skill or judgment on the part of the competitor, can be based on a study or comparison of 10,000 signatures, which are automatically written, and in which no skill or judgment, solely referable to and evoked by the competition, is exercised. ‘Skill or judgment’ carry their on connotation, being the Court’s formula for drawing a dividing line between what is and what is not a lottery. It is, therefore, clear that the words do not permit of evasion by subterfuge and that skill or judgment must be called for by the competition and exist in an active and subjective sense.”
R. v. Wallace (1954), 109 C.C.C. 351 (Alta S.C.), per Ford J.A., citing Roe v. The King [1949], 2 D.L.R. 785 at p. 789 (S.C.C.): “The case of Roe v. The King, supra (known as the Red River Barrel case), was also referred to. It was held that it required an element of skill to estimate the time that a 45-gallon capacity barrel would take to float the distance of 105 miles from Emerson to the Norwood Bridge in Winnipeg and surely that is so. Everyone who purchased a ticket was entitled to compete.”
Skill testing question.
Skill testing questions are commonly included in promotional contests in Canada in an effort to remove the chance element from a contest. This is because at common law, illegal lotteries were generally defined as consisting of three elements: (i) chance, (ii) consideration (i.e., typically a cash entry requirement) and (iii) a prize (which offences have been codified in the Federal Criminal Code). As such, based on these illegal lotteries offences, many contest organizers will often elect to remove either the consideration element (e.g., by offering a “no purchase necessary” entry option), chance element (e.g., including a mathematical skill testing question requirement to win or making a contest entirely a skill-based promotion), or both.
So … disposed of.
In Roe v. The King, [1949] S.C.R. 652, 94 C.C.C. 273, [1949] 2 D.L.R. 785, the Supreme Court of Canada held that the phrase “so … disposed of” under section 236(1)(c) of the former Criminal Code, 1932, c. 8, s. 1 refers “to the scheme indicated in the preceding subsections, that is, ‘by some mode of chance’. If there is merely skill or a mixed element of skill and chance, there is no offence.” The current section 206(1)(d) of the Criminal Code, which is one of the illegal lottery offences under section 206(1) of the Code, also does not include the term “chance” but rather refers to property “so … disposed of” in connection with “any scheme, contrivance or operation of any kind for the purpose of determining who, or the holders of what lots, tickets, numbers or chances, are the winners of any property …” Canadian courts have generally held that all of subsections 206(1)(a)-(d) of the Criminal Code require that it be proven that winners are selected by pure chance and not, for example, mixed chance and skill or pure skill.
Sweepstakes scam.
Canadian Anti-Fraud Centre: “After entering a fake sweepstakes contest in the mail, you will receive a call within two to four weeks from a fraudulent telemarketer. This person will usually identify themselves as a lawyer, judge, customs agent or other official. They will represent themselves as an agent for a particular company. You will be told that you have won a large cash award, but money must be sent up front for taxes, etc.”
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SERVICES AND CONTACT
We are a Toronto based Canadian competition and advertising law firm that 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
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For more information about our firm, visit our website: Competitionlawyer.ca
