This article is a modified version of an article originally published on the website of Conseiller-Juridique.ca.
The organization of contests, draws and lotteries is subject to a number of legislative provisions which remain unknown to many. In this article, we explain the main factors to take into consideration if, in order to promote a product, business or other commercial interest, you are thinking of organizing and encouraging residents of Quebec to take part in a draw or other contest, all of which are generally referred to under Quebec law as “publicity contests”.
1) The Act respecting Lotteries, Publicity Contests and Amusement Machines
In Quebec, the Act respecting Lotteries, Publicity Contests and Amusement Machines (the “Act”) and the Rules respecting Publicity Contests (the “Rules”) set out the main requirements that must be followed when organizing a publicity contest where the total value of the prizes is greater than $100. The Act provides that the provincial board responsible for regulating alcohol, races and games, the Régie des alcools, des courses et des jeux (the “Board”) is responsible for ensuring that those rules are followed. Some of such requirements are as follows:
The organizer of a publicity contest subject to the Act and the Rules must file with the Board a form describing the contest, within five days before the contest is launched if the total value of the prizes offered is less than $1,000, and within 30 days before the contest is launched in all other cases. The form is available on the website of the Board.
b) Duties payable and security
Regardless of the value of the prizes offered (provided it is greater than $100), duties must be paid in accordance with the value of the prizes and the place of residence of the persons eligible to participate in the contest.
For contests where the value of a prize is greater than $5,000 or where the total value of the prizes exceeds $20,000, security in the form of a letter of guarantee from a financial institution may need to be provided. This requirement also applies to contest organizers who have no head office or business establishment in Quebec, and to any organizer who has been convicted of an offence under the Act or the Rules in the year preceding the date of the contest launch.
c) Rules and advertizing
In addition to filing the duly completed prescribed form and paying the required duties, the person for whom the contest is carried on must also file with the Board, within 10 days before the contest is publicized, the text of the rules of the contest and, if the total prize value exceeds $2,000, the text of any advertisement used to promote it. The foregoing documents must be submitted in French.
It should be noted that the contest rules, the advertising in connection with the contest, the entry forms and the method of awarding the prizes must comply with the provisions of the Rules. For example, the contest rules must specify the conditions and deadline for entering the contest, the place, date and precise time the prizewinners will be named, the ineligibility of certain persons to enter the contest, and the potential recourses the participants may have with the Board. Considerable care must therefore be taken in drafting such rules.
d) After the contest
Within 60 days following the date on which the prizewinners are named, in a contest where the total prize value exceeds $2,000, a report must be filed with the Board by the organizer confirming, inter alia, that the prizes have been awarded and identifying the winners.
If the provisions of the Act or the Rules are infringed, an individual is subject to a fine of between $50 and $7,000, and a legal person to a fine of between $75 and $70,000. An infringement of the Act or the Rules may also lead to prosecution under the Criminal Code.
2) The Criminal Code
If the publicity contest is poorly structured, the organizer may be subject to prosecution under the Criminal Code. Section 206 of the Code criminalizes a series of acts in connection with the organization, promotion or sale of entries to participate in lotteries or other games of chance. Subsection (f) of s. 206 is of particular interest as it makes illegal any contest whose sole condition of entering is the purchase of a product or service. Anyone who contravenes s. 206 is liable to imprisonment for up to two years.
The Criminal Code provides however that it is permitted to organize lotteries and contests in accordance with rules established by provincial legislation, which of course includes the Act and the Rules.
It should be noted that it is because of the provisions of the Criminal Code that there generally is a requirement in the rules of publicity contests that participants answer a skill-testing question, as well as a specification that “no purchase is required”.
3) The Competition Act
Section 74.06 of the Competition Act also specifies certain requirements for publicity contests: (i) adequate and fair disclosure must be 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 promoter that materially affects the chances of winning; (ii) distribution of the prizes must not be unduly delayed, and (iii) where prizes have been allocated to a particular area, the winners must be selected and the prizes distributed within that area.
Failure to comply with these requirements can result in the organizer being ordered to publish a correction notice and pay a fine of up to $750,000 in the case of an individual and up to $10,000,000 in the case of a legal person. These amounts increase for repeat offences.
4) Rules imposed by broadcasters
If you wish to organize a publicity contest, you should plan ahead in order to be able to meet the deadlines for filing forms and the contest rules. We also recommend that you consult with your lawyer for assistance in drafting the rules in compliance with applicable requirements, and in completing the forms that must be filed with the Board.