Charitable gaming refers to lottery schemes permitted by a licence under the Criminal Code of Canada. These may include bingos, raffles, break open tickets and Monte Carlo events held by charitable and religious organizations.
Definition of Lottery
A lottery scheme is defined as any scheme that has the following three components:
- a prize;
- a chance (to win the prize); and
- consideration or a fee.
Therefore, a lottery scheme exists if money is paid or some other consideration is given for a chance to win a prize. There are many types of lottery schemes for which licences are not available. The licensing authority will confirm whether or not a licence is available for a proposed lottery scheme. If the proposed event is one for which a lottery licence is available, the organization must apply for a lottery licence. The organization is responsible for ensuring that all its schemes are operated legally.
Raffles by Donation
The use of the word "donation" in lieu of a purchase price for tickets does not alter the fact that consideration is being paid for a chance to win a prize. Accordingly, this type of raffle constitutes a lottery scheme under Section 206(1) of the Criminal Code. A licensing authority must not issue a licence for a raffle in which part of or the entire purchase price of a ticket is a "donation".
Who can get a licence to conduct a lottery event?
Canada's Criminal Code permits charitable and religious organizations to conduct a lottery scheme to raise funds once a licence is issued. Organizations must have a demonstrated charitable or religious mandate to provide programs for:
- relief of poverty;
- advancement of education;
- advancement of religion; or
- other charitable purposes beneficial to the community.
The following pre-requisites are mandatory to be considered eligible for a lottery licence:
- Organizations must be in existence for at least one (1) year.
- The organization must have a place of business in Ontario; demonstrate that is established to provide charitable services, in Ontario and use proceeds for objects or purposes, which benefit Ontario residents.
- Propose to use proceeds for charitable purposes or objects that benefit Ontario and its residents; and
- Assume full responsibility for the conduct and management of its lottery events.
The primary purposes of an organization are determined by considering:
- The mandate of the organization as set out in its incorporation documents or documents stating the organization's objects.
- The objects of the organization as described in its application for licence.
- The services that have actually been provided by the organization to the community.
Eligibility documentation required
An eligible organization must provide a completed application along with the following supporting documentation at the time of application or eligibility review:
- A copy of its letters patent;
- A copy of its constitution and by-laws;
- A copy of its budget for the current year;
- A copy of its financial statements for the preceding year;
- A list of its Board of Directors; and
- Any other documentation to support the application.
Municipal authority to issue licences
The Alcohol and Gaming Commission of Ontario (AGCO) is responsible for administering the lottery licensing program in the province. Municipalities are partners with the AGCO and may approve and license the following six types of lotteries:
- Bingo events with prize boards of up to $5,500;
- Raffles with prizes of up to $50,000;
- Break Open Ticket events that are not conducted in conjunction with another licensed gaming event, and where the tickets are sold within the municipality;
- 50/50 draws;
- Bazaar gaming events; and
- Media Bingo events.
Use of Lottery Proceeds – Eligibility Letter
Licensing officials must determine the eligible uses of lottery proceeds for each organization by examining the charitable classification of the organization's purposes or objects and activities. The Licensing Department will issue a letter of eligibility setting out the organization's permitted uses of lottery proceeds. If your organization does not have a letter or would like an updated letter, please contact Licensing Services at firstname.lastname@example.org or 519-360-1998.
Lottery Proceeds - Uses in Ontario
All proceeds raised from lottery licences must be used for a charitable purpose or object that directly benefits the residents of Ontario. The funds do not necessarily have to be spent in Ontario, but an Ontario resident or community must benefit. This policy applies regardless of the beneficiary's status as a citizen of Canada. For example, refugees living in Ontario may be beneficiaries of programs set up for the relief of poverty in Ontario. However, lottery proceeds cannot be used to bring non-residents to Ontario to then benefit from lottery proceeds. Also, proceeds must be used to generate a charitable, not an economic, benefit.
The following examples are eligible uses of lottery proceeds spent out-of-province to benefit a project or resident of Ontario:
- paying out-of-province medical expenses for an Ontario resident if the treatment is not available in the province, where the costs are not fully funded by the provincial government;
- buying medical equipment for an Ontario hospital from an out-of-province supplier; and
- paying the cost of an out-of-province educational opportunity for Ontario students enrolled in an accredited educational institution.
The following list provides some examples of projects that do not qualify:
- disaster relief provided to communities outside of Ontario;
- medical supplies for developing countries;
- foster child programs for children outside of Ontario;
- environmental projects outside of Ontario; and
- funding for foreign exchange students.
Although many of these activities are worthwhile projects, they provide a direct benefit to individuals outside Ontario. The Order-in-Council limits the allowable use of lottery proceeds to charitable activities that provide a direct benefit to the residents of Ontario. March 13, 2019
Please be advised that the year-end report needs to be submitted for any account that contains proceeds from a raffle type event. Should the account have profits from other lottery event types, please provide a ledger with your report detailing the proceeds.
Service Clubs or Royal Canadian Legions – Maintenance Costs – Building Funds
Licensing officials may permit Service Clubs to use lottery proceeds for the general maintenance of their own club premises, if the premises are used for the benefit of the community, up to an amount of two (2) per cent of net lottery proceeds. This percentage may be increased if the facility is used free of charge by the community more than two (2) per cent of the time (see Section 2.7.4(f)(i)(4), "Service club buildings," of the AGCO LLPM for further information). Service Clubs and Legions must complete the Use of Lottery Proceeds Building Maintenance Costs form before using funds for building maintenance purposes. This use of proceeds must be approved by Licensing Services.
Licensing may also permit building funds (see Section "2.8.1. Policies: Building funds" of the AGCO LLPM for further information).
Can lottery proceeds be used for administrative expenses?
An organization may also be approved to use lottery proceeds to pay some of its administrative expenses for charitable programs. To be considered an eligible use of lottery proceeds, these expenses must be essential for the direct delivery of the organization's charitable objects. The licensing authority must give prior approval to requests to use lottery proceeds for administrative expenses on a case-by-case basis. The Licensing Official may limit the use of proceeds to only those expenses that relate to the direct delivery of programs. The licensing authority must monitor the use of lottery proceeds to ensure they are used as approved, for expenses related to the direct delivery of the eligible charitable services, for the benefit of Ontario residents.
Currently only the AGCO can issue lottery licences for electronic raffles. Here are some links to information from the AGCO website.