CANADA Law and Practice Contributed by: Danielle Bush and Matthew Kelleher, McCarthy Tétrault LLP
Games of Chance and/or Skill Games of pure skill (that is, skill games and competi- tions with no element of chance) do not fall within the definition of an illegal lottery in Section 206 (1) of the Criminal Code and so can be legally provided without the consent of a regulator or any other government body. It is important to note that Canada’s highest court, the Supreme Court of Canada, has made it clear that if there is any element of chance built into the structure of a game, it will be considered a game of mixed chance and skill and not a game of pure skill. The US concept of a game or competition being “predominantly skill-based” is not recognised by the courts in Canada. Poker, for example, is considered to be a game of mixed chance and skill as there is an element of chance in the game flowing from the deal- ing of cards. Games of chance and games of mixed chance and skill are considered illegal lotteries unless no consideration is paid to enter, play or win a prize. Based on generally accepted interpretations of Sec- tion 206 of the Criminal Code, it is possible none- theless to structure a game of either nature so as to render it legal. Fantasy Sports The conduct of fantasy sports is not currently addressed by any federal or provincial statute or regu- lation. In Ontario, however, the AGCO iGaming Stand- ards apply to all sports, novelty, betting exchange and fantasy sports products. The debate among gaming regulators and Canadian lawyers about the legality of daily fantasy sports still continues, some taking the position that competitors are merely engaged in a form of betting and therefore engaging in illegal con- duct, while others take the position that it is a game of pure skill and therefore a legal competition. Having said that, it is generally agreed that if a person other than a competitor bets on the outcome of a fantasy competition, that constitutes illegal betting. Social Gaming Social gaming with no prize in money or money’s worth is not regulated per se by any government body. However, like any other consumer product, such games are subject to review and regulation by provin- cial consumer protection ministries and the federal Competition Bureau.
Ontario is one of the only provinces to licence spe- cific types of social games. The social gaming licence allows community groups, seniors’ homes, service clubs, and charities to host casual gaming events like euchre, cribbage, and bridge in public places. Bets are limited to CAD2 per person, with total cash prizes not exceeding CAD500 per day. No admission fees can be charged. The authors have also observed an increase in Cana- dian class action litigation concerning the provision of “loot boxes” in video games. The Criminal Code defines gambling based on monetary consideration, chance and a prize, rather than the knowledge of the specific prize and its value. The Code does not clas- sify loot boxes as gambling, and no Canadian court has ruled on this matter. Regardless of the gaming analysis, loot boxes are raising a number of consumer protection concerns for deceptive practices, such as exploiting consumers’ lack of understanding of how loot boxes work or obscuring the real value of the “prize”. A CAD2.75 million settlement with Epic Games in British Columbia and Quebec highlights consumer protection concerns over loot boxes in Canada. Federal and Provincial Statutes Set out below are the federal and provincial statutes that apply to activities that are generally agreed to constitute gambling. Federal At the federal level, the Criminal Code is the primary legislation that impacts gambling in Canada, as it con- tains both the primary prohibitions and exceptions respecting gambling and the federal penal law con- cerning proceeds of crime, including money launder- ing (Part XII.2) and the financing of terrorism (Sections 83.02, 83.03 and 83.04). The Competition Act is the only federal statute that is applicable to contests and competitions, referred to in the Act as “promotional contests”. Section 74.06 of the Competition Act prohibits any promotional contest that does not disclose the number and approximate value of prizes, the area or areas to which they relate (ie, regional allocation of the prize), and any important information relating to the chances of winning, such as
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