Running a Competition Legally

Why this has rules at all

A giveaway is a prize awarded by chance, and in Canada awarding a prize purely by chance in connection with a purchase runs into gambling provisions.

That is the reason for the feature everybody recognises and nobody explains: the mathematical skill-testing question.

Adding a genuine skill element removes the pure-chance character, which is why every Canadian contest asks you to work out an arithmetic problem before claiming a prize.

It looks like a formality and it is doing real work, which is worth understanding before deciding to skip it.

The four requirements

• A skill-testing question for the winner.
• Published rules, available before entry.
• Entry without purchase being possible.
• Honest disclosure of the prize and the odds.

Those four cover the general position across Canada. The third surprises people running a buy-to-enter promotion, and it is the reason contests carry a line about an alternative method of entry.

Quebec has its own regime

The reason so many Canadian contests exclude one province, which looks arbitrary and is not.

Quebec regulates contests separately, with a registration requirement, fees, and French language obligations for contests open to its residents above certain prize values.

For a large national promotion that is a manageable administrative step. For a small business giving away a hamper it is disproportionate.

Which is why the standard response is to exclude Quebec residents from entry and say so in the rules.

That is a legitimate and common approach, and it needs to be stated clearly rather than assumed.

This is a general description rather than legal advice, and the thresholds and requirements change, so confirm the current position before running anything substantial.

What the rules should say

Short and complete, published somewhere entrants can read before entering.

Who may enter, including any age limit and the geographic exclusion.

How to enter, and the alternative method that does not require a purchase.

When it opens and closes, with a time zone.

What the prize is and what it is worth, described accurately.

How the winner is chosen and when, and that they must answer a skill-testing question.

What happens if the winner cannot be reached, and who the promoter is.

A page on your website is the sensible place, linked from the post, since social platforms are a poor place to hold rules people may need later.

The platforms have their own rules

Separate from the law and enforced more actively.

Most platforms prohibit requiring people to share a post to their own profile, or to tag friends who have not consented, as a condition of entry.

They also generally require an acknowledgement that the platform is not involved in the promotion.

Those two are the ones small businesses break most often, because share-and-tag is exactly the mechanic that makes a giveaway spread.

Breaking them risks the post or the account rather than any legal consequence, which is a smaller risk with a more immediate cost.

Read the platform's promotion guidelines once, since they are short and they change.

A worked example

A business ran a giveaway requiring entrants to follow the account, share the post, and tag three friends.

It reached considerably more people than their normal posts and produced around four hundred entries.

There were no published rules, no skill-testing question, and no alternative entry method.

Nothing came of it, which is the common outcome, and two things were nonetheless true: the mechanic breached the platform's own guidelines, and the follower gain evaporated within six weeks as entrants unfollowed.

Their second attempt used a simpler mechanic, published rules on a page, excluded Quebec, and asked entrants to answer a question about the service instead of tagging anybody.

Entries were far fewer and roughly a third of them became enquiries, which the first had produced almost none of.

What you are actually collecting

The part with a longer tail than the contest itself.

A giveaway that collects email addresses is a list-building exercise, and consent rules apply to what you do with those addresses afterwards.

Entering a contest is not agreement to receive your newsletter, so if you intend to email entrants, say so at entry and make it a separate optional choice rather than a condition.

An address obtained without that will be one you cannot use, which makes the whole exercise less valuable than it appeared.

Say plainly in the rules what you will do with entrants' information and how long you will keep it.

Do that properly and a contest list is genuinely useful. Do it carelessly and it is a list you have to discard.

Whether it is worth running

The commercial question, which usually gets less attention than the mechanics.

Giveaways attract people who want the prize, and the number who want the prize is far larger than the number who want your service.

Which means a general prize produces a large, worthless audience: entrants who follow to enter and leave afterwards.

A prize that only your actual customers would want produces fewer entries and better ones: your own service, a voucher toward it, or something specific to your trade.

Judge it by enquiries rather than by entries, and expect the good version to look less impressive.

The counter-case

Contests can work well.

For a business with something genuinely desirable to give away, a well-run promotion produces reach, useful attention, and a reason for existing customers to talk about you.

The compliance requirements are also not onerous once known: a skill-testing question, a page of rules, and a line about Quebec is an hour of work.

There is a version of this caution that stops businesses running anything, which loses a legitimate tactic over requirements that are straightforward to meet.

Run it, meet the four requirements, choose a prize only your customers want, and judge it on enquiries.

Before you post it

1. Write the rules and put them on a page.
2. Include a skill-testing question for the winner.
3. Provide entry without purchase.
4. Exclude Quebec and say so.
5. Read the platform's promotion guidelines.
6. Do not require sharing or tagging.
7. Choose a prize only your customers want.

Step seven decides whether any of the rest was worth doing, since a general prize produces entrants who will never buy anything.

What you may do with the addresses afterwards is covered in email nobody asked for.

Frequently asked questions

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