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December 17, 2012

In an interesting article published earlier today by the Vancouver Sun, the Sun is reporting an apparent dispute between an environmental group (Pacific Wild) and B.C. gaming officials in relation to a conclusion by gaming officials that a private wolf-kill contest does not require a permit.

In particular, the Vancouver Sun’s story raises issues as to whether a contest being operated in the northeast Peace region – involving a cash entry for a chance to win larger cash prizes or other prizes (e.g., rifles, free taxidermy work or hunting shop gift certificates) – violates the illegal lottery offences (or other offences) of the federal Criminal Code.

According to the Sun’s reporting, the environmental group contends that the contest violates the Criminal Code, while one of the contest organizers has taken the position that the contest is legal given that it involves skill (i.e., the requirement to kill a wolf) and not chance.

In Canada, promotional contests are not only governed by the federal Competition Act, the law of contract and Quebec provincial law (if open to Quebec residents), but also must avoid the illegal lottery offences under the federal Criminal Code.

In general, an illegal lottery consists of consideration, chance and a prize.  However, the relevant provisions of the Code can be avoided where at least one element of the various offences is removed – for example, for some of the offences, at least some chance is removed and for another offence, involving mixed skill and chance, arguably where a prize does not consist of “goods, wares or merchandise” (e.g., potentially cash, trip or other prizes that do not fall within this definition in that provision).

Having said that, in addition to these illegal lottery offences, a further provision makes it a criminal offence to pay money (or valuable security) to become entitled to receive a larger amount of money or valuable security by virtue of the fact that others have subsequently paid money or security.  Unlike the other illegal lottery offences, this offence can apply regardless of any chance element (i.e., chance is not an element) and has been used from time-to-time for prosecutions of pyramid selling schemes.

Because, however, the relevant provisions of the Criminal Code are complex, rather archaic and with relatively little recent case law, it is important for contest promoters (and their counsel) to review the relevant Code provisions carefully with an eye to reducing the risk that a contest or promotion will be challenged as an illegal lottery (or violate the offence discussed above, which is sometimes used to challenge alleged pyramid selling schemes).

In short, each of the Criminal Code’s illegal lottery provisions is slightly different, and all must be reviewed to reduce the risk that a contest or promotion will be a criminal offence.

Key Considerations For Operating Contests in Canada

The following is a list of some key tips, though not meant to be exhaustive, for operating contests in Canada:

1.  Criminal Code.  Take care to avoid the Criminal Code illegal lottery offences (section 206).

2.  Short Rules.  Include “short rules” including all of the required Competition Act disclosure requirements for point-of-purchase materials – for example, print and in-store marketing, social media and Internet sites, packaging and labeling, television spots, etc.  Some requirements are set out in the Competition Act, while the Competition Bureau has a few additional things it likes to see disclosed upfront in short contest rules.

3.  Long Rules.  Precise precise “long rules” that reflect the details of the contest, anticipate potential contingencies (e.g., technical problems, the need to change the rules or promotion) and set out the details of the promotion as clearly as possible – for example, eligibility; how to enter; prize descriptions, number and value of prizes; draws and award of prizes; odds of winning; and indemnity and release provisions.

4.  General Misleading Advertising Provisions.  Ensure that none of the advertising or marketing materials are generally false or misleading (i.e., that the marketing materials generally comply with the misleading advertising sections of the Competition Act).

5.  Checklists.  If contests are routinely used for marketing, consider developing an internal checklist to ensure that all key requirements are included.

6.  Quebec Laws.  Ensure that Quebec legal requirements are met for contests run in Quebec (or eligibility is limited to Canadian residents, excluding Quebec).

7.  Intellectual Property Consents.  Consider whether consents are needed (and if necessary obtained) to reproduce 3rd party intellectual property or to transfer ownership in contest materials – for example, where contestants create original material as part of a contest or promotion.

8.  U.S. Advice.  Seek U.S. legal advice if the contest will be open to U.S. residents or limit the contest to Canada.

9.  Social Media Site 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).

10.  Other Competition & Advertising Rules.  Consider whether other competition or advertising law rules may apply.  For example, in addition to a stand-alone contest provision, the Competition Act also contains provisions governing deceptive prize notices, general misleading advertising and telemarketing that involves prizes.

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PROMOTIONAL CONTEST SERVICES

I offer a full range of promotional contest legal services for compliance with the Competition ActCriminal Code and other relevant laws.  My services include: preparing contests to comply with relevant federal laws, drafting short and long contest rules and statutory disclosure, reviewing promotional contest marketing and advertising materials, preparing winner release documentation, and vetting contest materials for Canadian misleading advertising law compliance.

Just Need Good Canadian Contest Forms
or a Checklist For Your Promotion?

Based on increased demand for efficient and affordable Canadian contest law rules, in addition to my contest law services I am now offering Canadian contest forms and a checklist for the operation of random draw and skill contests in Canada (excluding Quebec).  See: here.

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