1.1 What’s a contest?

A contest entails the drawing of one or more prizes from among the contestants. Companies are legally entitled to stage contests, provided they meet certain conditions. Above all, you must comply with the applicable regulations governing the jurisdictions where your contest is held. For example, producers who do not wish to translate their promotional materials into French can open their contests to residents of Canada with the exclusion of Québec residents.It is important to distinguish between a contest and a lottery. The latter is a game of luck where players must purchase their chance to win a prize. Lotteries are operated by the government of a given region and as such, are strictly regulated.
To avoid being considered an “illegal lottery,” a contest cannot combine more than two of the following three elements:

• Valuable consideration or participation costs (e.g. mandatory product purchase)
• Winner determined by random chance
• Prizes to be won

For example, eliminating the element of random chance makes the contest partially skill-based (e.g. by requiring contestants to correctly answer a general-knowledge question or mathematical problem).

1.2 Contests and children

Generally speaking, few specific provisions exist for children beyond the fact that the prize cannot consist of a product that is illegal to sell to minors (alcohol, tobacco, etc.).

While parental consent is not a legal requirement for contest participation, it is nonetheless strongly recommended.

In Québec, you must comply with the principles of the Consumer Protection Act prohibiting commercial advertising directed at children under 13 years of age, barring certain exceptions prescribed by regulation. When the prize is a product or item of particular interest to children (e.g. a toy), you must be very careful about how you choose to promote the competition.

1.3 Contests that employ user-generated content

A contest that features user-generated content — i.e. that requires contestants to submit content they create in order to participate — raises the question of rights and licenses. If you intend to use such content on your website or in your newsletter, the contestant must grant you certain permissions.

In Canada, for example, copyright involves two kinds of rights: economic rights, which include the right to use the work; and moral rights, which are linked to authorship. To authorize you to use their content for promotional purposes, participants must assign you their economic rights or grant you a user license and waive their moral rights.

You can obtain some of these authorizations directly through the contest rules; others may require a written signature. Seek the advice of a legal professional to help you deal with the question of user rights and licenses.

1.4 Personal information and spam

Some contests require participants to disclose personal information. Be sure to comply with applicable laws on the collection of personal information. Similarly, if you promote your contest by email or text messaging, you must abide by regulations governing commercial electronic messages.

You must comply with the applicable laws of each jurisdiction where your contest is open. Note that the rules can differ between provinces or states within the same country.

CANADA

Criminal Code and Competition Act

The legal apparatus that oversees competitions is the same across Canada except in Québec, where the Act Respecting Lotteries, Publicity Contests and Amusement Machines also applies (see below).

• Pursuant to the Criminal Code, you cannot require contestants to pay money or other valuable consideration (e.g. product purchase) as the sole condition for participation. Offer a “no purchase necessary” entry option that offers precisely the same chances of winning as all other modes of participation.

• The Criminal Code requires that winners be selected using a method other than pure chance. Accordingly, you must include a “skill-testing question” in the entry form — for example, a simple mathematical equation or a general knowledge question. Only participants who answer the question correctly will be eligible for the prize draw.

• You must obtain a waiver of moral rights and the transfer of economic rights or a license to use any content generated by a participant for promotional purposes (e.g. posting user content on your site’s home page).

• You cannot unduly delay distribution of the prizes.

• Other information required pursuant to the Competition Act include the approximate value of the prizes, the number of prizes, the regional allocation of the prizes, the chances of winning and any other important information relating to the chances of winning.

Additional information:  Competition Bureau – Guidelines: Promotional Contests

***QUÉBEC

1. The Act Respecting Lotteries, Publicity Contests and Amusement Machines and Rules respecting publicity contests

When the contest is open to Québec residents, you must:

• Notify the Régie des alcools, des courses et des jeux within the stated deadline; pay the required fees; and include obligatory legal notices in the contest rules pursuant to the Rules respecting publicity contests (e.g. the contest entry deadline, a description of the method of awarding the prizes, the number and a detailed description of the prizes offered along with the value of each prize, and the place, date and precise time the prizewinner will be named).

• Display contest rules and advertisements in French.

Certain requirements may vary depending on the total prize value. For example, when the total prize value exceeds $100, the promoter must pay the required fees and include obligatory legal notices. When the total prize value exceeds $1,000, the promoter must also notify the Régie that a contest is being held and file the prescribed form. If the total prize value exceeds $2,000, the promoter must file the text of the rules prior to the start of the contest as well as a written report after the prizewinner is named.

2. Consumer Protection Act

Québec’s Consumer Protection Actprohibits commercial advertising to children under 13 years of age on all media platforms, barring certain exceptions prescribed by regulation. This law governs the promotion of contests with children.

Apart from products that cannot legally be sold to children, there are no a priori restrictions on the prizes your contest offers. To prevent your contest from being considered as a commercial advertisement directed at children, consider the relationship between the following three factors:

1. The nature of the advertised prize (is it particularly attractive to children?)
2. How the contest is presented (is the focus on the contest itself or the prize?)
3. Where the contest is promoted (is there a simple mention on the home page, or is the message “hammered home” to children throughout the site?)

The nature of the prize is crucial: if it is a “children’s product” — i.e. something attractive to young audiences like a toy or platform subscription — you must be very careful in how you promote your contest. The contest must not be an advertising tool for a product intended for children. Contest promotion should focus on the competition itself rather than on the prize/product. Allusions to the product and brand should be discreet.

An example of good practices Your youth website focuses on plants and wildlife. You launch a contest where you ask children to submit a text about their favourite animal based on information from your site. The winners will receive four tickets to the Museum of Nature. Your promotional materials emphasize the pleasure of using new knowledge about wildlife (“Show us your skills as a biologist!”). The logo and name of your commercial partner — for example, the Museum — are discreetly displayed at the bottom of the ad.

For any questions, contact the Office de la protection du consommateur and refer to Backgrounder Embedding Advertising.

Additional information:

Régie des alcools, des courses et des jeux: Publicity Contest Notice

Office de la protection du consommateur: Advertising Directed at Children under 13 Years of Age

UNITED STATES

Contests are governed by an array of federal and state laws. Generally speaking:

• A competition must have official rules.
• If you offer different entry procedures, the opening and closing dates must be the same for each (e.g. entries postmarked with the closing date must be accepted).
• Winners cannot be charged any fees for claiming their prize.

There is an important distinction to be made between a “contest,” where a skill-testing question is involved in determining the winner, and a “sweepstakes,” where the winner is selected at random (e.g. through a draw).

For a contest:

• Winner selection must be based on skill.
• You can charge contest entrants a fee or require them to purchase a product, but be careful: not only will you need a permit, but you must also be sure to comply with rules that can differ between states.

For a sweepstakes:

• You cannot require entrants to purchase a product or other valuable consideration to participate. Adopt a “no purchase necessary” entry option.
• Allentry methodsemployedmust provideentrants withthe same chances of winning.

EUROPEAN UNION & FRANCE

The Unfair Commercial Practices Directive is fairly broad with regard to contests. The Directive states that all contests must be organized lawfully. Accordingly, it provides a list of commercial practices considered “misleading” or “aggressive” that are to be avoided when organizing a contest. For example, it is considered dishonest to launch a contest and state that prizes can be won without awarding the prizes described.

Unfair Commercial Practices Directive

AUSTRALIA

Contests are the responsibility of the states and territories, which means that regulations vary across the country. Australia is flexible with regard to contests:

• You have the right to require that participants purchase a product or service in order to enter the contest.
• Competitions that do not determine the winner based purely on chance do not require licenses (e.g. a drawing competition).
• Contests based on chance may require a license in certain states.

Additional information:

Australian Government: Gaming (gambling) authorities

The Apple App Store requires official rules for sweepstakes and contests to be presented in the App, clearly indicating that Apple is not a sponsor or involved in the activity in any manner.

Additional information

Advertising Standards Canada recommends that you:

• Collect only the information sufficient to determine the winner in contests, games or sweepstakes-type of advertising to children.
• Limit the advertiser’s right to deal with anyone other than the parents or guardians of children who win a promotional contest, game or sweepstakes.

Additional information

The Canadian Marketing Association states that the marketing agent can collect personal information from children for contests without needing to obtain explicit parental consent, provided that the agent:

1. collects only the amount of personal information needed to determine the winner
2. communicates only with the winner’s parent or guardian
3. does not retain personal information after the contest
4. only uses personal information to determine the winner
5. does not transfer personal information or make it available to a third party

Contest rules must be presented in a manner that is clear, visible and easy to locate, read and understand. The rules must also continue to be available for a reasonable period after the contest closes.

Additional information