LOTTERY LAW
expression (e.g., “(24 ÷ 4) × (9 - 5) + 2”), which the winner of a contest or sweepstake must answer in order to obtain the prize. As its name implies, the STQ introduces an element of skill into the equation. It has the effect of shielding operators against liability from some of the peripheral offences within s. 206(1), many of which pertain to an arrangement whereby property is disposed of by “any mode of chance whatever.” 13 By introducing an element of skill, the reasoning goes, the winner would not be chosen by a “mode of chance.” This practice has long been accepted by the courts, 14 and the otherwise dubious reasoning makes sense when one observes that the preposition phrases “of chance” and “of mixed chance and skill” are distinguished in s. 206(1)(f). On that note, astute readers will have noticed another peculiarity: the STQ does not reduce liability under s. 206(1)(f) itself. Insofar as s. 206(1)(f) prohibits the distribution of prizes in relation to both a paid game of chance and one of mixed chance and skill, an STQ is of no effect, and an AMOE is therefore necessary to shield against liability. As a result, the combination of an STQ and an AMOE is the standard approach for sweepstake and contest operators to avoid incurring liability under s. 206(1). Application Since there is no Canadian case – America PAC’s giveaway occurred entirely within the U.S. – the analysis in this section is necessarily hypothetical. Still, the exercise is a useful one. Despite the title of this article, it is worth noting that whether the giveaway would have constituted an illegal lottery under Canadian law is not the only question to consider. Even if the giveaway were found not to meet the three-part test, that would only suggest that it does not violate s. 206(1)(f). Liability could still arise under other provisions in s. 206(1), which capture a broader range of conduct associated with unlicensed games of chance. As discussed below, however, this is ultimately unlikely given the facts surrounding the chance element. Would the Giveaway Have Offended s. 206(1)(f)? The relevant language in s. 206(1)(f) concerning the element of prize is “any goods, wares or merchandise.” This raises
the obvious question: does the US$1 million payout qualify? Somewhat surprisingly, the answer is likely no. Canadian courts have considered whether “goods, wares or merchandise” includes money, and the prevailing interpretation is that it does not. 15 Normally this is a non-issue, as this gap would typically be filled by s. 206(1)(e), which applies where the prize consists of money. However, that subsection only applies to the typical scenario of a crowdfunded lottery. Since America PAC’s giveaway does not involve participants contributing funds or pooling resources, it likely falls outside the scope of s. 206(1) (g) as well. As for chance, the question is whether the giveaway constitutes a “game of chance” or one of “mixed chance and skill.” Based on existing jurisprudence, likely not. The Supreme Court of Canada has held that a “game of chance” or one of “mixed chance and skill” requires “a systematic resort to chance to determine outcomes, not merely the unpredictable that may occasionally defeat skill.” 16 Thus the Supreme Court was alive to the inescapable element of randomness that permeates all of life, and pronounced that that was not enough. While there may an element of randomness inherent in America PAC’s selection process – it’s subjective rather than mechanical – that likely does not rise to the level of “a systematic resort to chance.” Moreover, even if some element of chance were present, it is doubtful that the selection process engages the participants’ “skill.” The vetting process, as described in the Pennsylvania decision, presumably involved evaluating factors like social media activity and demographic fit. These are not easily framed as matters of skill. On balance, the giveaway likely does not fall within either category. Lastly, on the issue of consideration, this element has not been subject to the same level of judicial scrutiny in the lottery context, making its contours less certain. However, unlike the approach taken by the Pennsylvania court, we are not precluded from drawing on contract law for guidance. One accepted definition in Canadian contract cases is “some right, interest, profit, or benefit accruing to one party, or some forbearance, detriment, loss, or responsibility, given,
13 Criminal Code , ss. 206(1)(a), (b), and (c). 14 See, for example, R. v. Young , 1978 ALTASCAD 410 (CanLII), <https://canlii.ca/t/fp4c0> 15 R. v. Andrews , 1975 CanLII 805 (SK CA), https://canlii.ca/t/g7hh5 and Miramichi Agricultural Exhibition Association Ltd. v. Lotteries Commis- sion (N.B.), 1995 CanLII 16862 (NB CA), https://canlii.ca/t/gdltc 16 R. v. Riesberry , 2015 SCC 65 (CanLII), [2015] 3 SCR 1167, https://canlii.ca/t/gmm2m
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IMGL MAGAZINE | SEPTEMBER 2025
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