Your Contest Might Be Illegal: Designing a Legal Online Competition

Posted on: 27 October 2015


When running a contest in Canada, you will need to make sure that you are not accidentally running a gambling operation. A contest can become an illegal game if it contains certain characteristics.

Designing Your Legal Contest

To be considered a form of gambling, a game must require that you pay to enter, there must be an element of chance, and there must be a prize. Therefore, if you remove one of those elements, your contest will not be considered gambling.

For example, let's say you own a website and you decide to give users an incentive to return by giving away free prizes. The prizes are handed out to random users. This approach would be legal. (However, if your website required that you pay for membership in order to access the random free prize, your website could now be considered illegal.)

Another legal example is an online game which simulates gambling that you must purchase to play. The user might play a digital slot machine that gives the user a randomized chance of winning. However, the game could not then pay out an actual prize. The user would have to play for the sake of winning alone.

A third possibility would be a game that the user would have to enter to win and that would have a prize, but the game would be completely skill-based. For instance, your server might host a digital death match in which the gamer with the highest kills wins a prize. Since the odds of winning would be based entirely on the user's ability to play the game rather than on luck, the game would not be considered a form of gambling.

Following Laws Regarding Competition

To avoid being accused of gambling, consult with a lawyer before you place a contest on your website. Post the rules of the contest upfront so that any users will not misconstrue your contest as a form of gambling. It is required under competition laws for your rules to be posted. You can post the relevant points on one page and link to the full legalese elsewhere so it is always accessible.

Be sure to also include a disclaimer that warns users that technical issues could cause the user to lose the contest. For instance, if your server is overloaded and this prevents a player from receiving a contest entry, your users need to know ahead of time that this risk exists. Once each of these factors has been accounted for, you are ready to post your contest.