by Shaya Silber,
Businesses are always trying to find new ways to promote themselves and generate more revenue. One such way is running promotions such as raffles. However, before conducting a raffle, there are certain legal implications that should be taken into consideration.
The Criminal Code of Canada contains provisions aimed at preventing illegal gambling. Some of these provisions may touch on contests and raffles conducted by businesses.
Section 206 of Criminal Code states:
(1) Every one is guilty of an indictable offence and liable to imprisonment for a term not exceeding two years who;
(f) disposes of any goods, wares or merchandise by any game of chance or any game of mixed chance and skill in which the contestant or competitor pays money or other valuable consideration;
Courts have interpreted this section to include any game where there is an element of chance, even where there is a combination of chance and skill. In R v. Balance Group International Trading, the court examined whether a “claw crane” (a game which is often found at arcades, and allows the participant to operate a crane-like device to grab a prize) violated the criminal code. The Ontario Court of Appeal stated:
…the amount of control exercised by the ordinary player was so minimal that the game operated as one of chance or at best mixed chance and skill. The evidence established that the average player simply could not exercise sufficient skill to compensate for the other elements of the game that were wholly beyond the power of the player to influence.
The Criminal Code does contain some exceptions. Section 207 of the Criminal Code states that provincial governments may conduct lottery schemes as well as issue gaming/lottery licenses in some circumstances.
In Ontario, the power to license lotteries is vested in the Alcohol and Gaming Commission of Ontario (AGCO). The AGCO may grant licenses for raffles where the prize is valued at over $50,000. The AGCO has delegated the power to regulate raffles under $50,000 to local municipalities, such as the City of Toronto’s Gaming and Licensing office. Examples of who may be eligible for raffle license are organizations that are religious, educational, or who have a demonstrated commitment to benefitting the community.
In addition to the Criminal Code and AGCO/Municipal rules, the Competition Bureau has its own rules that are applicable to raffles and contests. The Competition Bureau essentially seeks to ensure that there are no deceptive practices, and that adequate disclosure is made about the contest.
Section 74 of the Competition Act states:
74.06 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.
Furthermore, a participant in a contest should not be required to visit a business’ location to obtain further information about the contest.