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The history of lottery in Canada
Canada is a North American country that has a lot to offer to its residents. With amazing quality of life, breathtaking landscapes and abundant supply of maple syrup, it ranks among the top countries in the world to live in. The lottery system in Canada can be traced back to a long time. But until 1967, it was any lotteries and contests were considered to be illegal in the country. With an amendment to the law, things began to change. This change started with a bill introduced by the federal government and sponsored by the then Minister of Justice, Premier Trudeau that aimed at updates all the obsolete laws. Lottery laws were part of the proposed change. The article discusses in detail the events that eventually led to the changes in the law. After close to two years of discussions and appealing, the Criminal code was amended in the year 1969. Loto-Canada Inc. was among the first lotteries that were set up. It was incorporated to help Quebec meet its deficits from the 1976 Olympic Games. Eventually, the final decision on the provincial and territorial governance of lotteries and contests that still holds to date was finalized in 1983.
The first thing to understand is that Canada is divided into provinces and territories. Each of these provinces functions similarly to “states” in most countries and although the terminologies cannot be used interchangeably, it essentially is similar from a governance point of view. This bit of information helps to understand how the lottery operations are divided among the Canadian provinces. The country has a total of ten provinces and three territories. Each of these territories has its separate governance that is in turn overseen by the national government that the prime minister of the country heads. The legalities for lotteries are based on jurisdiction and this falls in territorial governance. However, there is a set of rules and regulations that apply to all territories and provinces. These are largely governed by the Competition Act and the Criminal code.
Before discussing all of this, let us begin by taking a look at how the modern Canadian lotteries came to be.
The legal Journey of the Canadian Lotteries
The concept of lotteries is centuries old. In simple terms, it meant winning and receiving prizes in contests that involved chance or skill or in most cases, both. This meaning changed and modified over the years when laws were put in place to protect people from the risks of losing money and property because of contests, lotteries, and gambling activities. As per the initially drafted Canadian law, the Criminal code (s189) stated that – it is an indictable offense to conduct any of the numbers of activities related to “any proposal, scheme or plan for advancing, lending, giving, selling or in any way disposing of any property, by lots, cards, tickets, or any mode of chance whatever.”
One of the biggest lotteries that ran in the world was the Irish Sweepstakes, which was established in the year 1930 to finance hospitals. Before there was an amendment to the criminal code, buying a lottery or contest ticket for the Sweepstakes was considered to be illegal. In 1967, the minister of Justice at the time, Pierre Trudeau (father of the current prime minister, Justin Trudeau) sponsored a bill introduced by the federal liberal government that wanted to update laws that were not relevant to the time period. As part of this, there was an amendment that was introduced with regard to the lotteries. In the year 1968, Montreal mayor Jean Drapeau introduced the concept of voluntary tax. Here, individuals would buy tickets for a small amount of money and have the possibility of winning a jackpot if they answered questions about Montreal correctly. Because the contestant’s ability to answer the questions determined the winning prize money, the mayor stated that this could not be considered as a lottery. But, by September 1968, the Quebec Appeal Court deemed the voluntary tax to be illegal. This was then appealed to the Supreme Court.
These two separate events that occurred simultaneously side-by-side became historical landmarks for the amendment in the country’s lottery laws. Finally, after a lot of debate, an amendment was made to the Criminal Code on 23rd December 1969. This amendment allowed provinces to manage and govern lottery systems within their jurisdiction.
Quebec was the first province to set up the Inter-Loto in the year 1970. Both the federal government and the other provinces set up their own lotteries the same year soon after Quebec. In 1973, the Federal government allowed the organizing committee of the 1976 Olympic Games to run a lottery to raise money for the Olympic Games. The committee was allowed to sell lottery tickets under two conditions 1. The provincial government agrees to the sale of these tickets in their jurisdiction 2. The proceeds were used only for developing sports facilities in the province and to provide a financial contribution to the Olympics. Between the year of the establishment of the lottery and 1976, $230 million was raised for the Olympics and $25 million for the provinces.
The final changes in lottery laws that led to provincial governance
Loto-Canada Inc. was among the first federal lotteries to be run. It was established in 1976 to raise money for Quebec’s financial deficits from the Olympics. This was close in 1979 because of opposition from the other provinces who wanted the operation of lotteries within the provincial government. The provinces, in turn, agreed to pay quarterly payments to the federal government in support of programs for fitness, sports, recreation, arts, and culture. Another lottery ran by the federal government was the Canadian Sports Pool Corp. This was established in 1983 after the government passed the Athletic Contests and Events Pool Act. Under this act, the Canadian Sports Pool Corp could sell tickets and operate any lotteries. This violates the 1979 agreement and the provinces moved the federal court for legal proceedings.
Finally, the federal government and the provincial governments came to an agreement in June 1985. As per this agreement, the federal government would withdraw completely from operating any lotteries in the country. There would also be an amendment made to the Criminal Code removing the federal
The lotteries in Canada as of 2018
All the provinces and territories run their lotteries separately. Some of the large lotteries are run by two or three provinces combined. The Western Canada Lottery Crop, for example, established under the Canada Business Corporations Act, is governed by Alberta, Saskatchewan, and Manitoba. The profits and proceeds made from the lotteries primarily fund sports, recreation, culture, community service, and health research programs. In the year 1985-86, The Western Canada Lottery Corp distributed $122 million dollars to the member provinces. The British Columbia Lottery Corp distributed $104 million in the same year and The Ontario lottery Corp, which was established in 1975, has profits of $320 million. The lottery group in Quebec is known as the Loto-Quebec and this was established in 1969. The Atlantic Lottery Corp and the Interprovincial Lottery Corp began operations in 1976. The sales of the Canadian lottery sales kept steadily increasing despite the recession in 1985-86. And they continue to retain their popularity even today. Canada has three nationwide lotteries. These are – Lotto 6/49, Lotto Max and Daily Grand. The games are run by the Interprovincial Lottery Corporation. This is a group of five regional lottery commissions that are owned by their respective provincial governments. 48% of the proceeding from the sale are used for the jackpot and 52% is used for local causes and sponsorship of hospitals.
As of 2018, the lotteries in Canada are run by five regional corporations – The Atlantic Lottery Corporation (New Brunswick, Nova Scotia, Prince Edward Island, Newfoundland, and Labrador), Loto-Quebec (Quebec), the Ontario Lottery and Gaming Corporation (Ontario), The Western Canada Lottery Corporation (Manitoba, Saskatchewan, Alberta, Yukon Territory, Northwest Territories, and Nunavut) and the British Columbia Lottery Corporation (British Columbia). All of these five corporations are part of the Interprovincial Corporation that run games like Lotto 6/49 and Lotto Max mentioned above.
Purchasing lottery or contest tickets online
The laws in Canada with regard to the sale and purchase of lottery tickets online are not complicated. Simply put, it is legal and allowed in all provinces that take part in the lotteries. The sales of lottery tickets are overseen by each law of each of the provinces and territories. All of the provinces have large-scale corporations running the lotteries online. These are listed above. Any individual who is a resident of Canada can purchase lottery tickets that are eligible in their province. This information on which province residents are eligible to participate can be found on the websites of respective corporations. The websites will also have sales of lottery tickets for the nation-wide games that are run. Online purchase is also possible for any individual who is not a resident or citizen of Canada. Although, it would be good practice for the buyer to check with the lottery laws of their respective countries. If the winner is an immigrant and a current resident, then the Canadian laws would apply. It is safer to check with respective country laws for this as well.
Similarly, if the buyer is a Canadian, purchasing lottery ticket of another country online from Canada, it is advisable to check with the lottery laws and regulations of the country from which the ticket is being bought. Yes, lottery tickets from other countries can also be bought from Canada online. The big international US games such as Powerball and Megamillions have fans everywhere in the world. Canada is no different. There have been stories and instances where people from Canada who live near the United States borders drive down in order to purchase a ticket in the hope of hitting the Powerball jackpot. But for the most part, people from Canada purchase these tickets online.
For the buyers to know
One of the most important things that buyers should know is that Canadian law and legislation have layered legislation upon legislation to ensure that consumers and buyers are protected from any kind of fraud or deceit. The detailed steps taken to this extent is one of the things that make participating in Canadian lotteries unique. Therefore naturally, the first thing to know would be the details of the laws that protect the buyers.
The legislation that governs Canadian lotteries
Criminal Code: Any form of gambling, contests, lotteries was initially illegal in Canada. After the long journey and few amendments later, there are exceptions made to this. One of the primary legislation that governs lotteries is the Criminal Code. As per the Criminal Code (s.207), businesses and activities that are licensed by the province are deemed to be legal. They will have to be registered with the provincial gambling programs. In (s. 208 and 209), the code criminalizes cheating during playing the games and failure to comply with the regulations set by the province.
Competitions Act: This act states that any business that is announcing contests or lottery games should disclose the specific information of the prizes. All information with regard to the number of prizes, the value of prizes, the areas in which the game would operate, etc. must be shared beforehand. The business must “make adequate and fair disclosure of any fact within the person’s knowledge that materially affects the chances of winning.” Failure to comply can lead to a fine and up to 14 years imprisonment.
Canadian Anti-Spam Legislation: This legislation referred to as CASL, was established on 1st of July 2014 applies more specifically to online lottery sales. It protects consumers from the risks of a false or misleading advertisement or information sent out by companies. The legislation states “Any message sent by electronic communication must be received with consent, must clearly identify who sent the message, must allow the recipient to contact the sender (contact information must remain valid for at least 60 days), and permit an unsubscribe option where opting out can be done at no cost and up to at least 60 days later. Opt-out requests must be processed within 10 days.” Every electronic message must have the option of getting a positive and explicit expression of consent from consumers.
Personal Information Protection and Electronic Documents Act (PIPEDA) and Privacy Act: These Acts govern the privacy concerns of the consumers. As per PIPEDA, organizations are not allowed to collect and use consumers’ information with notifying them. And the approved information can only be used for the purpose shared with the consumer. The businesses or organizations will not use information with implicit consent from the consumer. There has been a clear and informed consent. Similarly, for prize money winners, the lottery corporations require that consumer shares specific details with them to be able to claim the prize. The Privacy Act states that this information cannot be used for any other purpose by the corporations other than its intended purpose for which consent was given.
Legislations by Province: Apart from all of the above legislation, each province has its set of legal regulations to protect the buyers. This includes illegalization and criminalization of certain commercial tactics such as false promotion, misleading information, and representations.
The Age limit:
The age limit for purchasing lotteries in Canada is 18 years. This applies to all the provinces and territories. It is also strictly advised not to give lottery and contest tickets to a minor as a gift. It is required that the person claiming the prize be 18 years of age or above. Although purchasing lottery gift cards is an option, it is still not recommended to give lottery cards as gifts to minors and young adults. Being a country that allows provinces to legally operate lottery systems and run gambling units, it is a risk for any young person to be exposed to something that could lead to an unhealthy and harmful addiction.
Purchasing the lottery tickets online
As discussed above, lottery, games and contest tickets can be purchased online in Canada and this is not limited to the residents or citizens of Canada. Any individual from anywhere in the world can participate and play these games. However, in certain cases, a citizen or resident of another country may not be allowed to participate because of the lottery laws in their country. Thus, every buyer should make sure that their chosen lottery game and their chosen mode of payment for the tickets is allowed in their country.
Payment methods: With most of the country participating in lotteries, Canada has made its accessibility to lottery retailers easy and its websites user-friendly. One the buyer selects the lottery ticket of choice, then there are different options available to be able to pay online. Cash and Debit cards are the most common mode of payment. It is also the most recommended mode of payment. Using credit cards to purchase lottery tickets can be highly dangerous as it is difficult to keep track of the money that is being spent. It is an unnecessary risk and should be avoided. The availability of payments through e-wallets is also not advisable. If the buyer wants to use an e-wallet that he trusts, then it is best if the money should be moved to the wallet from only the debit card, not the credit card.
If purchasing in retail stores, then buyers can pay directly with cash. While buying the tickets along with that long list of groceries, most often buyers just purchase the ticket with a debit card along with everything else. The debit card is also the best mode of payment for websites. However, buyers should be careful and make sure that they pay only the costs for the ticket and no other charges. In a story that broke out in 2015, Peggy Staruch who had bought a lottery ticket online found that she had paid nearly more than double for her lottery tickets and to be able to play her lucky numbers. Instead of charging $3 dollars (the cost of the ticket), $6.50 was charged to her card. When she checked, it was found that the bank had charged the balance as a cash advance fee. Cash advance fees, ranging between $3 and $10, are only charged in ATMs for those who withdraw money with a credit card. Staruch, in particular situation, has neither withdrawn from an ATM nor used a credit card. Therefore, it is important that the buyer keeps a vigilant eye on the payments being deducted from their card. If something feels wrong and there has been a surcharge of any kind that was unfamiliar, buyers should contact the retailers and their respective banks immediately.
Online Subscriptions: The Canadian lottery corporation has online subscription offers for buyers who can purchase a particular lottery subscription theme. This works as periodic investments (monthly or weekly as the buyer needs) and the lottery tickets can be purchased automatically for a set of numbers that are chosen beforehand by the subscriber. It would help save a lot of money and also help ensure that the subscriber does not miss a number draw. This makes purchasing lottery tickets online mechanized, easy and quick.
Lottery syndicates and group purchases: Another purchase option available for players to is to purchase tickets as a group. These are known as lottery syndicates. This means a group of people join together and purchase a large number of tickets at the same time. This increases the group’s probability of winning. The prize money is divided among the members in the syndicate as decided. This is a personal decision that the group will have to make before purchasing the tickets together. Often, it is quite simple – it is divided as per the financial contributions of the group member in purchasing the tickets.
The quick pick: A quick pick is an option that can be seen at the time of purchasing lottery tickets online, more specifically when the buyer chooses the numbers. It is a form that allows buyers to “quick pick” the lottery tickets randomly. A few people find that quick picks work for them.
Risks involved: Any person planning to invest in lottery tickets should be aware of the different risks that come with it. A buyer should purchase tickets only from authorized retailers. As soon as the ticket is purchased, they should sign the back of the tickets. This can help ensure that a third party does not claim the ticket if it is lost or stolen. If tickets are being bought online, then the name and other details can be printed out at the back of the ticket. Online lotteries also have their share of scammers. It is important to make sure that the websites from which tickets are being bought are legal and authorized. Else, this may put the buyers and their families and immense financial risk. E-mail messages, spams, text messages mostly tend to be spam. No one can win a lottery without investing in the tickets. Although there are laws and legislation that will protect consumers, these cannot be effective if the consumer is negligent. Therefore, the buyer should collect relevant information before investing.
For Winners to know
For the winners, it is important to know the process for claiming the prizes and understanding the implications of winning prize money. To begin with, from the time of purchase of the ticket until the winning numbers are called, the ticket has to protected and ensured that it does not get lost or stolen. As mentioned above, printing the buyer’s details at the back of the ticket is the best way to do this. But, this has to be done meticulously. Any changes in the printed details and the presented identification will lead to an investigation.
Next, the buyer should know how to check if the ticket has won. This is easy. The numbers on the tickets have to be compared to the numbers being announced on the website/newspaper. The information on when the winning numbers are announced can be found on the websites of the respective companies. In the In Western Canada Lottery Corporation, for example, prizes are listed by provinces on fixed days.
Claiming the Prize money:
Different jurisdictions have different sets of rules for this. Some of the general rules are discussed here. Prizes can be claimed during business hours from Monday to Friday at authorized retail stores. Retailers can pay prize amounts between $200 and $2000. Winners can also go to authorized prize payout locations to claim the prize money. Depending on the money won, they may be asked to do a press interview. Apart from these prizes can also be claimed at the respective organization’s corporate office. Most of the prize money will be paid in check. Only very large sums will be allowed for wire transfer. The ceiling on this amount will have to be confirmed at the office by the winner. During the time of the claim, the winner must have 1. The ticket with details printed on the back 2. A valid government-issued identity card. Few corporations such as the British Columbia Lottery Corporation allow prize claims via mail. Guidelines for this can be found on the website.
Expiration dates: All of the lottery, contest and game tickets have expirations. The winners will have to claim the prizes before the end of this period. Prizes will not be paid if the ticket is expired. The time periods for this varies from one Lottery Corporation to another. Winners should check the expiry date of the ticket as soon as it is purchased and once again as soon as the winning numbers are announced. All unclaimed prizes will be returned to the provinces and territories.
Expiration details for some of the lotteries ran by the Western Canada Lottery Corporation are given below. Other provinces and Lottery Corporation may have similar deadlines if not the same.
“DAILY GRAND, LOTTO MAX, LOTTO 6/49, WESTERN 649, WESTERN MAX, POKER LOTTO, EXTRA, KENO, and PICK 3 tickets expire one year from the draw date. SPORTS SELECT ticket holders have one year from the date the last selected game was played to claim any prizes. SCRATCH ‘N WIN tickets have an expiry date printed on the back of the ticket.”
Taxes on the prize money: This is where the uniqueness of the Canadian lotteries that were mentioned at the beginning comes in. All prizes won from lotteries, contests, games in Canada are non-taxable. This applies to both prizes received in cash and in-kind (such as a car). Winners should note that if annuity method payment is selected, there may be tax implications on the interest amount. This is only for residents of Canada (applicable to immigrants as well). If the winner is neither a citizen nor a resident of Canada and hails from a foreign country, they will have to check with the tax authorities in their country for the tax implications. Although not liable to pay taxes to Canadian authorities, they may have to pay taxes to their country’s authorities. This is applicable to other countries in the North American continent as well. For instance, if the winner is a US citizen, then they may have to pay taxes to the IRS as per the respective state and national law.
Claiming the lottery prize anonymously: It is crucial to the federal and provincial governments of Canada that the lottery systems be run in a transparent and honest manner. As part of this need, every provincial and territorial lottery corporation makes it compulsory for lottery winners (especially jackpot winners) to share their details and participate in publicly in a photoshoot campaign to be able to claim the prize. Some of the information that could be shared along with the winning story are – full name, municipality, photograph, prize details, occupation, employer and marital status. Sharing the stories of the winners not only allows corporations to be transparent but also acts as an opportunity to show the public that the winners are people from different walks of life and not employees, retailers or merchants associated with the corporation. Purchasing the ticket is deemed to be an agreement to all the corporation’s terms and conditions including public claiming of prizes.
Not being able to claim prizes anonymously puts winners at risk. Especially those who have won a big jackpot. The prize money attracts scammers who often reach out to the winners for potential “investments”. Things also get much worse. Stories of death threats, robberies, attempted and successful murders after the winners claim the money do not come as a surprise. Because of this, most corporations consider requests to remain anonymous on a case to case basis. The winner must prove that there was a legitimate threat against them. However, this may prove to be too late. There are positive stories where corporations have agreed to hold back the identity of the winner. It is best to get the aid of an attorney for this process.
Summary
The Canadian lottery system is old and has been facing numerous changes over many years. And there may be many more changes yet to come. Although there is the advantage of a non-taxable prize and the advantage of multiple legislation protecting the buyers and participants of the lotteries, many still argue that Canada needs a stronger lottery law. But overall, the country has been successful in running the lotteries in a smooth and efficient manner. It is in the hands of the buyers of the lottery games to learn all there is to know. If that is done, playing the lotteries will be nothing but a fun experience!