The number of contests online make it easier for anyone to run a contest and even more important to ensure that contest rules have been drafted properly. With the increasing number of contests especially online, businesses have tried to become even more savvy and creative when coming with great contest ideas and in some cases, have really raised the stakes high to impress customers with elaborate and enticing contest promotions.

Contests Rules - Legal Requirements

Consequently, every business needs to be aware of how contests are legally conducted and need a good marketing/advertising and entertainment lawyer to ensure their contest rules are compliant. The primary legislation governing promotional contests are federal statutes:

• s.74.06 of the Competition Act
• s.206(1) of the Criminal Code

You can read more about how to conduct a contest in Canada by reading our article, "Contests Checklist (& Downloadable Contest Rules Template)".

Both federal rules still apply today. Section 74.06 of the Competition Act requires you to fairly disclose the number and approximate value of the prizes, the areas they relate to, and any fact you know that materially affects the chances of winning. You must not unduly delay handing out prizes, and you must choose winners by skill or at random. Section 206 of the Criminal Code makes it an offence to give away property by lots or any mode of chance, or by a game of mixed chance and skill where the entrant pays money or other valuable consideration. That is why Canadian contests offer a free way to enter ("no purchase necessary") and require a winner to correctly answer a skill-testing question before claiming a prize. Since September 19, 2019, the Crown can prosecute a section 206 offence either by indictment or as a summary conviction offence. The conduct the section covers did not change.

The penalties are also much higher than when this article was first written. Since June 23, 2022, a court can order a corporation that breaches the civil deceptive marketing rules, which include section 74.06, to pay up to the greater of $10 million ($15 million for a repeat order) and three times the benefit it gained. If the benefit cannot be worked out, the cap is 3% of the corporation's annual worldwide gross revenues. For an individual, the cap is the greater of $750,000 ($1 million for a repeat order) and three times the benefit.

There are also other laws to be aware of governing contest rules include Privacy laws, copyright, trademark, intellectual property and defamation laws. There are also certain codes of ethics that impact on contests such as the Canadian Marketing Association(CMA) and the Canadian Association of Broadcasters (CAB) such as advertising to children and Guidelines for Advertising, Promotion and Commercial Messages. There are also special considerations is a contest is governed in Quebec or involving children.

Contest Rules - Privacy Legislation

When running a contest with co-sponsors, the issue of whether personal information can be shared with promotional partners is important and can be addressed in contest rules. The following provides guidelines for how to deal with this issue when running a promotional contest.

Contest Rules Should Contain Language that Addresses the Following:

• Opt-in: It has to be a positive "opt-in" language and can't "opt out" or use a negative option
• Purpose - State the purpose of collecting the information (ie. Receiving newsletter)
• Date of destruction - Stipulate to entrant how long personal information will be used until and that it will be removed from the database at that time
• Removal of personal info - Provide entrant with contact information such as an email address to have personal information deleted from their database at any time as entrants should be entitled to withdraw their consent at any time

If the personal information of an entrant is being shared with co-sponsors and other promotional partners, permission must be clearly obtained from the entrant and only used for the purpose for which it was gathered. The entrants' personal information cannot be shared for marketing purposes to other third parties without their consent.

Contests Rules - Quebec

Quebec's rules changed a great deal on October 27, 2023. Quebec's Bill 17, a law to reduce regulatory and administrative burden, removed publicity contests from the Act respecting lotteries, publicity contests and amusement machines and repealed the Rules respecting publicity contests. The Régie des alcools, des courses et des jeux no longer oversees publicity contests. For contests that were not filed with the Régie before that date, you no longer file a notice, rules or advertising with the Régie, pay duties on prizes or post security. Contests that were filed with the Régie before October 27, 2023 stay under the old rules. Quebec's French-language rules still apply, so contest rules, entry methods and advertising for Quebec residents must be in French. Quebec's Consumer Protection Act still requires clear disclosure of the conditions for winning a prize, and the federal rules above apply in Quebec as everywhere else in Canada.

The rest of this section describes the Quebec rules as they stood when this article was first written. Contests in Quebec are governed a bit differently and there are special requirements for contest rules in Quebec. Quebec is the only province that has passed a statute that specifically applies to contests known as the Act respecting lotteries, publicity contests and amusement machines. Publicity Contest is defined in the Act as follows:

Publicity Contest means a contest, a lottery scheme, a game, a plan or an operation which results in the awarding of a prize, carried on for the object of promoting the commercial interests of the person for whom it is carried on;

If a contest is run in Quebec, it will need to satisfy the requirements of that province's legislation on "publicity contests" which is administered by the Régie des alcools, des courses et des jeux. If Quebec residents are included, then the following additional requirements must be adhered to:

• All materials for Quebec residents must be in French
• Notice of the contest, together with the applicable duties, a copy of the contest rules, and the text of any advertisement used in the contest must be filed in advance with the Régie;
• Duties based on the value of prizes available to Quebec residents must be paid in advance;
• The contest rules must contain certain prescribed information;
• In certain cases, a security bond with the Régie may be required

The following language is added in all contest rules that are aimed to residents of Canada outside Quebec as well as Quebec:

For residents of Quebec, any litigation respecting the conduct or organization of a publicity contest may be submitted to the Régie des alcools, des courses et des jeux for a ruling. Any litigation respecting the awarding of a prize may be submitted to the Régie only for the purpose of helping the parties reach a settlement.

In Quebec, a publicity notice must be completed and submitted to The Régie des alcools, des courses et des jeux ("Régie"), whenever a publicity contest is carried out where the total value of the prizes exceeds $100. When the prize value is greater than $2,000, then the contest notice must also be accompanied by the advertising text and contest rules. In addition, the following duties are payable whenever a contest exceeds $100 (along with the form provided in Section 59):

• 10% of the value of a prize offered to contestants from Quebec exclusively;
• 3% of the value of a prize offered to a group of contestants from Canada exclusively, when that group includes contestants from Quebec;
• 0.5% of the value of a prize offered to any other group of contestants including contestants from Quebec.

The board may also ask for a security based on the value of prizes offered to Quebec contestants. Generally, one also has to submit a publicity contest notice, contest rules and advertising materials within a certain time period prior to the launch of the contest.

When this article was first written, while the Régie did not require the translation of contest rules into French for contests held exclusively online, the Office québécois de la langue française did require translation. Therefore, given the additional requirements, it is not surprising that many contest sponsors opted to exclude Quebec residents from entering contests. With the Régie rules gone, French is now the main Quebec-specific requirement. Quebec strengthened its Charter of the French Language in 2022 (Bill 96), so check the current French-language rules before launching. The Quebec requirements listed below applied to contests filed with the Régie before October 27, 2023.

The requirements for conducting a contest in Quebec include the following:

• An authorization has been issued by the Board upon payment of the required duties and examination fees
• The publicity contest must have the authorization number assigned by the Board on every document relating to the contest
• The Board may not issue an authorization for a publicity contest or revoke an authorization for the following reasons pursuant to Section 57.3 of the Act:
  

  • the public interest so requires;
  • the contest advertising leads contestants to believe, falsely
  • that they have won a prize;
  • that they enjoy an advantage over other participants; or
  • that they have won a prize whereas they have won only a part or a component of such a prize;
  • the person for whom the contest is carried on does not provide all relevant information or document required by the board, or refuses or neglects to comply with a request or order of the board;
  • the person for whom the contest is carried on fails to comply with any of the provisions of this Act or the rules.
  • The board may, in addition, revoke its authorization if it is obtained following false representations.

• Those conducting a contest where the total value of prizes exceeds $1000, must also provide the prescribed form at least 30 days prior to the launch of the contest. If it is less than $1,000, then the prescribed form and any other requirements may be provided at least 5 days prior to the launch of the contest.
• The value of prizes is calculated on what the total amount that would be charged in the Quebec market for goods or services of equal value.
• A prize offered to contestants from Quebec exclusively would be applicable to the following situations is noted in Section 62 of the Act:
  

  • "the rules or the advertising of a publicity contest clearly indicate that that prize is offered only to a contestant from Quebec, that the contest is carried on only in Quebec or that it is only for persons residing in Quebec";
  • the participation form for a publicity contest may be obtained only in Quebec; or
  • the main part of the commercial interests of the person for whom a publicity contest is carried on are in Quebec, even if the advertising of that contest is broadcast outside Quebec.
  • [However, this] "does not apply to a publicity contest carried on to promote the commercial interests of a regional periodical from outside Quebec or a radio station or television station from outside Quebec, even if that periodical is distributed in Quebec or that station broadcasts into Quebec".