A Detailed Guide on the Contest/Sweepstake Regulations in Canada
If you want to run a contest or sweepstake in Canada, you need to comply with certain rules that govern such types of activities. Failure to comply with the contest regulations in Canada will result in significant penalties such as payment of large sums of fines (Eg- $15 million) or a conditional sentence.
So, to help you start your own promotion in the right way, we’ve put together a detailed guide on the Canadian contest regulations. We have also highlighted special rules, exceptions, and other international laws that may affect you.
Let’s dive right in.
Legal Terms Surrounding Contest Regulations
There are some basic contest regulation terms you need to be aware of.
- Prize – A reward given to the winner of a competition. One or several prizes can be offered.
- Entry – A type of submission that is used to decide who wins the prize. Limitations can be set for participants to either one or several entries.
- Contest – Won by either merit, effort, or skill. The winner either achieves something (first place), is judged, or is voted on. For example, in a baby photo contest, the baby picture with a maximum number of votes wins. In a writing contest, the participants will be judged by professional writers.
- Sweepstakes – A type of giveaway that is won by random drawing, chance, or luck. A winner is selected randomly from a pool of entries. In fact, most social media contests are sweepstakes.
- Lottery – A type of promotion where participants usually need to pay money for a chance to win. It could be something like purchasing an item, buying tickets, submitting receipts from purchase, or asking people to “like” or share a social media post to earn an entry.
Promotional Contest Rules in Canada you Must Adhere to
Follow the below contest regulations in Canada to keep things legal.
Note – If it is an online contest, you need to add all these terms and conditions in the footer part of the landing page. For an offline contest, you should print these terms and the participants must sign them.
- Eligibility – Include contest eligibility and any restrictions such as age or place
- Entry method – First off, add a free entry rule. Next, add a second method of entry in addition to the regular entry method. It can be something like purchasing a product
- Privacy notice – Clearly describe how you will store the personal information provided by the participants. You must also comply with the Personal Information Protection and Electronic Documents Act. If you are sending email or text messages, Canada’s Anti-Spam Legislation (CASL) will be applicable
- Time, date, and duration – Make sure to include these details correctly as it will help you avoid any disputes that may arise
- Circumstances, time, and place of the winner – According to the Canadian Competition Act, complete transparency is required with respect to winner details
- Alternate winner selection rules – At times, the winner may not be willing or unable to collect the final prize. In such situations, you need to announce an alternate winner and a procedure to select them
- Detailed description of the prize and its value – You have to give a complete description of the prize, especially if it includes a trip or vacation
- Products – If you plan to include products in your entry method include the methods of entry
- Rules for minors – If minors can take part in your contest, you have to include a detailed set of rules specifically for them
- Rules for Quebec – If people from Quebec can participate in the contest, then you need to comply with the rules that govern contests in Quebec. For instance, promotional materials must be in English and French, a security deposit must be given to the provincial government by the promoter of the contest, and all advertising material must be filed with the regulator of the province. Many exclude Quebec because it has unique provincial legislation that must be followed to lawfully conduct contests. As a result, the cost of running a contest will also increase
- A clause where you can change or deem the contest void – This clause will be helpful when you face difficulties during the contest and you have to stop it immediately
- Copyright for user-generated content (UGC) – Include a non-exclusive license to publish, display, reproduce, or change the entrants’ UGC submissions. Once an entrant is confirmed as the winner, ensure they sign a written assignment of the rights of the UGC submission to you. You can go through Canada’s Copyright Act to learn more on how to comply with UGC in a lawful manner
- Liability limitations – For example, if your contest prize is a trip or vacation, you have to include a clause that explains that your company will not be responsible if the winner is injured or harmed during the travel
- Skill-testing question – According to the Canadian Criminal Code rules, participants must answer a skill-testing question such as a multi-step mathematical equation before they are selected as the winner of a contest
- Instructions to access the complete rules – Participants should be able to take a single action such as one mouse click or a phone call to get the full rule.
- No purchase necessary – Provide a ‘no purchase necessary’ method of entry for participants. This will eliminate the ‘consideration element’ that is similar to lotteries according to the Criminal Code law
- Have compliant short rules – Include short rules/mini-rules (Eg – approximate value of prizes, regional allocation if any, skill-testing question, odds of winning, and opening/closing date for the contest) in all the marketing materials to comply with the requirements set out in the Competition Act
- Add long rules – Add long rules that cover all the details of the contest and potential contingencies that may reflect the contest as closely as possible. (Eg – technical problems like internet or server issues, eligibility requirements; how to enter; prize descriptions, and odds of winning)
Canadian Laws That Govern Contest Regulations
These are the 3 legislations that govern promotional contests/sweepstakes in Canada.
- The Competition Act
- The Criminal Code
- Quebec’s Act Respecting Lotteries, Publicity Contests, And Amusement Machines
- Alcohol Contest Rules – Code for Broadcast Advertising of Alcoholic Beverages and Alcoholic Beverage Advertising Clearance (if applicable)
You can also take a look at the penalties imposed by the courts to find out the fines and the punishments imposed by the court of Canada on businesses and individuals for not adhering to the laws.
Here are some more points you have to keep in mind while creating contest regulations.
- Get help from websites such as Random.org so you can choose your winner without having any bias.
- If you want to run a contest involving tobacco, alcohol, dairy products, insurance, financial services, or gasoline, consult with a legal expert before you proceed.
- Educate participants on whether they must pay taxes for the prize value they earned. Click here to learn more.
- Technical Guidance Document for Running Promotional Contest in Canada
- If you plan to run your contest on social media, be sure to read and follow the contest rules of each platform
- If contestants outside Canada can participate in your contest, you need to be aware of the international sweepstakes regulations & contest laws. Take a look at these two articles to learn more – Article 1 and Article 2
- In the USA, most of the rules that are followed in Canada are applicable. However, they have some unique differences where the IRS (Internal Revenue Service) requires the prize value to be included in the winner’s gross income (1099 form) and sign an affidavit of eligibility. They also have laws by state. Click here to learn more about the official rules followed in the US and their state policies
A contest can be a fun way to engage and expand the reach of your products and services to your target audience. It is an excellent way to create some excitement around your business. Just make sure to adhere to the rules. Be honest, upfront, and clear, and follow the laws so you can make your contests/sweepstakes a great success.
Have you run a contest in Canada? How did you frame the rules? Do share your experience in the comments section below.
Note – This guide is not a substitute for legal advice. We strongly suggest that you consult with a professional legal team to draft or review your contest rules and policies before your launch.