Void In Quebec: sweepstakes contests in La Belle Province

“Void in Quebec”. No, that’s not the latest tourism campaign of la belle province. “Voids in Quebec” is a phrase that is synonymous with Canadian sweepstakes contests. Or at least it was synonymous with Canadian sweepstakes contests until recent legislative changes in Quebec removed most of the sweepstakes contest requirements for contests open to Quebec residents.

This article will review sweepstakes contests and sweepstakes contest law in Canada and Quebec, summarize the recent legislative changes, and analyze how these changes will impact sweepstakes contest providers.

1. Sweepstakes Contests in Canada

As IMGL Magazine readers know, gambling generally comprises three elements: consideration, chance, and prize.[1] As long as gambling has been defined by reference to consideration, chance, and prize, entrepreneurs have been finding creative ways to remove one of those three elements thereby providing a game that is like gambling but does not meet the appropriate tests.

For example, an entity may remove the prize element by providing an online “play-for-fun” casino, where virtual chips may be purchased and risked on games of chance, but no real-money or money’s worth prizes are offered. Or, the element of chance may be removed, by providing skill games that do not contain a “systematic resort to chance”.[2] Finally, others may remove the element of consideration by running a contest that involves chance, prizes, and is free to enter.

Brands run free-to-enter contests to promote their products and brand generally. Typically, an underlying product provided at fair market value, and a bonus item such as a contest entry or instant win opportunity is provided for free.

Canadian coffee giant Tim Hortons runs a sweepstakes contest called “Roll Up the Rim” that runs from early March to early April each year. Roll up the Rim is ingrained in Canadian popular culture, and Tim Hortons gives away tens of millions of dollars in prizes each year. Roll Up the Rim is now all digital, so future generations will not experience rolling up the waxy rim of a Tim Hortons disposable coffee cup with their teeth to reveal the “Please Play Again” message. All coffee cup rolls are now virtual and carried out through a customer’s Tim Hortons phone application.

Roll Up the Rim is free to enter because drinks are the same price irrespective of whether the Roll Up the Rim contest is running or not. Sweepstakes contests also require free entries to be made available to participants without them making a purchase. Anyone can obtain Roll Up the Rim entries for free by following instructions provided in the contest rules. A uniquely Canadian sweepstakes contest law wrinkle is that prizes cannot be awarded on the basis of pure chance. Contestants must therefore answer a skill testing question prior to rolling up their first digital rim.

Roll Up the Rim meets the legal tests[3] and common-sense definitions of a sweepstakes contest. As is typically the case with quasi-gaming activities, savvy entrepreneurs have found creative ways to run sweepstakes focussed businesses that push the legal tests and our common-sense understanding of sweepstakes contests with varying degrees of legal success.

2. Federal Law Related to Sweepstakes Contests

The primary Federal law sources for Canadian sweepstakes contest laws are the Criminal Code[4] and the Competition Act.[5]

In addition to the gambling prohibitions in the Code, there are two additional factors arising from the Code which sweepstakes contest operators should consider.

First, s. 206(1)(a)-(c) of the Code creates various offences for “disposing of any property by…any mode of chance”.[6] As a result, one of the unique features of Canadian contest law is that prizes cannot be awarded based on pure chance. Therefore, some game or activity must occur which has some element of skill prior to prizes being awarded. This typically manifests as a math-based question which participants must answer correctly prior to receiving their prize and is known colloquially as the “skill-testing question” requirement.

Second, s. 206(1)(f) of the Code creates an offence for “disposing of any goods, wares or merchandise by any game of chance or mixed chance and skill in which the contestant or competitor pays money or other valuable consideration”.[7] This section has been interpreted as prohibiting contests where the only way to enter the contest is to buy a product or service. Therefore, sweepstakes contest providers must offer free alternative methods of entry to demonstrate that individuals not purchasing an underlying product may still enter a contest.

Finally, the Act, which is a civil provision, requires that sweepstakes contest promoters meet the following conditions:

(a) adequate and fair disclosure is 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 not unduly delayed; and

(c) selection of participants or distribution of prizes is made on the basis of skill or on a random basis in any area to which prizes have been allocated.[8]

3. Provincial Law Related to Sweepstakes Contests

Quebec is the only province in Canada that had legislation specific to sweepstakes-type contests.[9] As a result of this legislation and associated compliance obligations placed on contest operators, contests were often not open to Quebec residents, thereby excluding 24 percent of Canada’s population. Sweepstakes contests were addressed in the Quebec Act under the definition of “Publicity Contest”.

A Publicity Contest had the following three elements:

• a contest, lottery scheme, a game, a plan, or an operation;
• which results in the awarding of a prize; and
• carried on for the object of promoting the commercial interests of the person for whom it is carried on.[10]

The Régie des alcools, des courses et des jeux (the “Régie”) was responsible for overseeing Publicity Contests.

Providers offering Publicity Contests in Quebec had numerous compliance obligations, including the requirement that contests with a prize pool between $100-$2,000 had to:

• file a contest notice thirty days before contest launch (except if prize pool was under $1,000, then file 5 days before launch), and
• pay a percentage of the overall prize value to the Régie (10% for Quebec-only contests, 3% for Canadian contests that included Quebec, .5% for international contests that included Quebec).

Contests with a prize pool over $2,000 had to:

• file a contest notice with the Régie 30 days before contest launch;
• pay a percentage of the overall prize value to the Régie (10% for Quebec-only contests, 3% for Canadian contests that included Quebec, .5% for international contests that included Quebec);
• file contest rules and advertisements with the Régie 10 days before contest launch; and
• complete and file with the Régie a written report with name, address and date the prize was awarded for each winner of a prize of $100 or more and verify whether all prizes have been delivered within 60 days of the date the winner was named.

Given the additional requirements for having contests in Quebec, it is unsurprising that contest providers chose to exclude Quebec residents rather than comply.

Further, for any contests where the value of prizes offered specifically to Quebec residents is over $5,000, or the total value of all prizes in the contest is at least $20,000, the contest provider had to file a security bond with the Régie.

1. 2021 Changes to the Quebec Act

In June of 2021, Quebec passed Bill 92, which exempted international Publicity Contests from certain requirements. This legislation removed the requirements for Publicity Contest operators running international contests to: (a) provide .5% of the total value of the prizes to the Régie and (b) post security for contests. Contest operators running international contests still had to comply with several other international requirements, including: (a) registering the contest with the Régie, (b) submitting the rules to the Régie in advance of the contest, (c) including certain Quebec-specific language and translating the contest into French; and (d) filing reports with the Régie at the conclusion of the contest.

Rules for provincial and national contests remained the same.

1. 2023 Changes to the Quebec Act

On October 27, 2023, Quebec passed Bill 17, which removed all references to Publicity Contests in the Quebec Act and repealed the Rules Respecting Publicity Contests. All contests could now exist free from providing fees to the Régie or posting bonds. Contests would no longer have to register with the Régie, rules would no longer have to be submitted prior to contests, Quebec-specific language would not have to be inserted into the contest rules, reports would not have to be filed with the Régie at the conclusion of the contest. Publicity Contest providers were free from the Régie’s reign of contest supervision tyranny.

1. Impact of 2023 Changes

Sweepstakes contests may now be open to Quebec residents without sweepstakes providers having to register with the Régie. How will this impact sweepstakes contests in Quebec?

One notable beneficiary of the updates to the Quebec Act are the savvy entrepreneurs (described earlier) who rely heavily on sweepstakes to promote their underlying products. Examples include a clothing brand providing sweepstakes entries as a promotion for purchasing clothes and a social casino providing sweepstakes coins as a promotion for purchasing social casino coins. These would have been Publicity Contests and the contest providers would have been required to comply with the previous provisions of the Quebec Act.

These sweepstakes providers were effectively locked out of Quebec due to the impracticality of complying with the Publicity Contest rules. Particularly in the case of social casino providers, it is unclear how to determine the nature of a specific contest whereby participants receive free sweepstakes coins which they can use to play games of chance and mixed and chance and skill.

However, there are still unique features of Quebec as compared to the rest of Canada that sweepstakes contest providers must consider.

First, the application of the Charter of the French Language means that all contest rules must be provided in French.

Second, recent amendments to Quebec’s Act respecting the protection of personal information in the private sector[11] mean that Quebec is now the strictest jurisdiction in Canada with respect to privacy. The Quebec Privacy Act sets out numerous privacy compliance related obligations, including with respect to consent, collection of data, use of location tracking, and transferring personal information outside of Quebec. The Quebec Act applies not only to Quebec-based businesses, but also to entities outside of Quebec processing personal information of Quebec residents. Given the additional privacy compliance obligations for non-Quebec based businesses choosing to process the personal information of Quebec residents, it will be interesting to see if more sweepstakes contests will be open to Quebec residents.

4. Instant Win for Quebec Residents?

Sweepstakes contests are a popular way for brands to promote products by providing customers (and non-customers obtaining free entries through alternative means) with opportunities to win prizes. Cunning entrepreneurs have embraced sweepstakes contest principles to place additional emphasis on the sweepstakes component of a contest while still ensuring that the underlying product meets industry expectations from a quality and value perspective. These sweepstakes contests may be gambling-adjacent, but if conducted properly, are not considered gambling.

In Canada, the primary Federal law sources for Canadian sweepstakes contest laws are the Code and the Act. Under the Code, contest providers must: (i) not charge a fee for entries; (ii) offer free alternative methods of entry to demonstrate that individuals not purchasing an underlying product may still enter the contest; and (iii) ensure that prizes are not awarded solely on the basis of chance (often manifesting as a skill-testing question).

Quebec was the only Canadian province to have laws specific to sweepstakes contests (referred to in the Quebec Act as Publicity Contests). These laws required Publicity Contest providers to comply with numerous obligations, including by paying a fee and posting a bond to the Régie. As a result, contests were often void in Quebec, and sweepstakes-forward entrepreneurs did not operate in Quebec.

In October 2023, the Quebec laws related to Publicity Contests were repealed. In theory, Quebec not having any laws specific to Publicity Contests should make it easier for sweepstakes contest operators to provide sweepstakes contests to residents of Quebec. However, it will be interesting to see whether this translates to more available sweepstakes contests in practice, due to Quebec language laws and Quebec having the most onerous corporate compliance obligations with respect to privacy.

[1] In Canada, for example, see R. v. Robinson (1917), 29 C.C.C. 153 (Sask. C.A.).

[2] Chance is defined in Ross, Banks and Dyson v. the Queen (1968), 70 D.L.R. (2d) 606, [1968] S.C.R. 786, 1968 CarswellOnt 16 (S.C.C.).

[3] A discussion of what is an appropriate skill testing question is outside the scope of this paper and almost certainly academic given the popularity of Roll Up the Rim as well as other sweepstakes contests provided by global brands and the lack of concern expressed by Canadian authorities about the appropriateness of the skill-testing question.

[4] R.S.C., 1985 c. C-46. [hereinafter, the “Code”].

[5] R.S.C. 1985, c. C-34. [hereinafter, the “Act”].

[6] Supra note 3, s. 206(1)(a)-(c).

[7] Ibid at s. 206(1)(f).

[8] Supra note 4 at s. 74.06.

[9] Act Respecting Lotteries, Publicity Contests and Amusement Machines, 1990, c. 46, s. 18. Available at http://www.legisquebec.gouv.qc.ca/en/showdoc/cs/L-6.  [Hereinafter referred to as the “Quebec Act”].

[10] Ibid. at 1(b).

[11] Chapter P-39.1, [hereinafter the “Quebec Privacy Act”].