Message from the CEO
On behalf of the AGCO, I am pleased to release the Findings Report for the Electronic Raffle Framework initiative.
This is an exciting time for charitable gaming in Ontario. We have seen many changes in the past few years, including the introduction of electronic games in bingo halls and the recent launch of the “Catch the Ace” progressive raffle pilot. Now, with the amendment to the Criminal Code to allow charities and religious organizations to use computers to conduct and manage raffles, we have the opportunity to develop an electronic raffle regulatory framework. Our objective is to take an approach that is focused on the achievement of clear regulatory outcomes that allows for innovation, flexibility, and the greatest possible benefits to charities, all while remaining engaged in productive conversations with our many stakeholders.
Stakeholder engagement is one of the AGCO’s key organizational commitments, and as such, we have welcomed the opportunity to hear from stakeholders about their ideas for the future of charitable raffles. I am happy to say that the engagement process on electronic raffles provided the AGCO with substantial feedback and many good ideas for how to move forward. We have seen that the charitable gaming sector prioritizes honesty and integrity, and wishes to provide raffles in a responsible manner. Through our engagement process, we heard from many stakeholders about how electronic raffles could help their organizations. At the AGCO, we understand that charitable raffles are important fundraising opportunities, and we want to ensure that charities can benefit from the use of computers.
This findings report will summarize all the feedback that the AGCO has heard to date, either through formal responses to our consultation paper, conversations at our roundtable meetings with stakeholders, or other channels. This input feeds directly into the development of a regulatory framework for the broader implementation of electronic raffles across the province. This is a large and complex undertaking, and implementation will take a phased approach.
While the formal consultation period has now closed, we are always happy to hear from our stakeholders and we will continue to engage in a constructive dialogue as we move forward in the development and implementation of the regulatory framework for electronic raffles. On behalf of the AGCO, I would like to thank all of the individuals and organizations that took the time and effort to provide thoughtful feedback and ideas for the future of electronic raffles.
Chief Executive Officer and Registrar of Alcohol, Gaming and Racing
The Electronic Raffle Framework initiative got its start in 2014, when the Government of Canada amended the Criminal Code to allow provincial governments and other licensing authorities to begin licensing charities and religious organizations to use computers for the sale of tickets, selection of winners, and distribution of prizes for raffles, including 50/50 draws. Before this change, only provincially-operated lottery schemes were permitted to use computers.
Given the possible scope of changes, Ontario is taking a comprehensive approach to the development of a regulatory framework for electronic raffles. As a first step, the AGCO launched an interim electronic raffle framework in September 2016, which included Mega Raffle charities—charities that have offered raffles with prize boards of over $1 million for several years—and the charitable foundations who participated in the OLG
Electronic Raffle 50/50 Pilot Program. The lessons learned from the interim framework will inform the development of the broader electronic raffle framework. You can find more information about the interim framework in the AGCO’s Information Bulletin No. 77.
Along with the AGCO’s ongoing work on the interim framework, we launched an extensive consultation process in Fall 2016. We released a consultation paper “Developing a Regulatory Framework for Electronic Raffles in Ontario” in October 2016 and welcomed written submissions from stakeholders and the public. Following the consultation paper, we held roundtable meetings with a variety of stakeholder groups, including charitable organizations and associations, responsible gambling groups, electronic raffle suppliers, and municipalities and government partners.
Through both the written submissions and the roundtable meetings, the AGCO has gained substantial insights into how a regulatory framework could best address the needs of stakeholders and mitigate the potential risks that come with the use of computers for raffles. We received many recommendations on how a future framework could allow charities to reduce administrative burden and costs while raising more funds for the causes they support, and how the AGCO could help to promote a transparent, efficient, and accessible market for electronic raffle systems and supplies. We also heard from experts in the field of responsible gambling about how to minimize the risks of problem gambling related to charitable raffles.
This Findings Report reflects the feedback received from stakeholders throughout this consultation period, primarily through formal responses to the consultation paper and comments made during roundtable meetings. The stakeholder feedback outlined in this report does not necessarily represent the views of the AGCO or the Government of Ontario. This report will also provide information on the next steps in the development of the regulatory framework. This report will be distributed to the stakeholders that participated in the consultations and it has been made available on the AGCO’s website.
Please note that although the consultation period is officially closed with the release of this Findings Report, the AGCO always welcomes input and feedback. Comments can be submitted by email at firstname.lastname@example.org.
Benefits and Opportunities for Charities
The AGCO’s goal is to maintain an effective regulatory framework for charitable gaming that maximizes the honesty and integrity of electronic raffles, while at the same time allowing for flexibility, innovation, and growth.
We want to ensure that the key risks for electronic raffles are managed, and that rules are clear, concise, do not impose too many administrative steps, and are not overly rigid. We understand that charities want to minimize their raffle expenses to maximize the proceeds going to charitable causes. Overly expensive electronic solutions or equipment may prevent these causes from benefiting from electronic raffles.
In building Ontario’s electronic raffle framework, the AGCO envisions an environment that is transparent, efficient, and accessible.
What We Heard
Types of products and potential benefits
Types of Electronic Raffles:
Stakeholders had a number of ideas about the types of electronic raffles that they would like to offer, including:
- Electronic 50/50 draws
- Linked electronic 50/50 draws across multiple venues
- Progressive raffles like ‘Catch the Ace’
- Various types of draws (house, car, elimination draws, cash calendars, second chance draws (Encore concept), auctions, electronic scratch tickets, and “spin to win” type games)
- Frequently occurring electronic raffles (e.g. weekly draws) in bingo halls
- Subscription based raffles, where players can sign up to buy tickets for regularly-occurring draws over a period of time
- Raffle machines in charitable gaming centres
The use of computers could allow for many different options in how charities deliver raffles. Participants noted several specific features that could enhance a consumer’s experience, including:
- A mobile transactional system that is automated and scalable to allow for more efficient sales, ticketing, and communication about the draw.
- A completely internet-based, self-serve system that accepts online payments, sends ticket purchase confirmation and tickets electronically, and notifies players of raffle results electronically. The system could be accessed through mobile devices with charity-specific apps, personal computers, manned point-of-sale terminals, or unmanned automatic ticket dispensers.
- Streaming draws online, particularly for progressive raffle draws, so that the draw can be held in a smaller location, rather than having a public draw which requires the charity to incur additional costs for a large venue and security.
- Electronic money transfers for cash prizes.
- Electronic messaging to notify players of their wins.
Potential Benefits for Charities:
Participants generally agreed that the use of computers for charitable raffles is a logical development in the modernization of the way charities fundraise. Some of the specific benefits discussed were:
- Benefit charities by reducing operating costs and administrative workload, and increasing accountability, security and integrity.
- Charities feel they will be able to spend more time fundraising and less time on administration, and ultimately bring in more revenue to positively impact the community.
- Immediate cost savings on printing and postage.
- Reduction or elimination of spoiled tickets, or the need to do a second draw to find a winner.
- Easier prize claim process.
- Heightened consumer confidence and satisfaction.
- Level the playing field for charities of all sizes.
- Improve speed and convenience of consumer experience.
- Attract a broader audience by providing more raffle options.
- Faster turnaround between sales deadlines, draws, and winner notification.
- Facilitate easier adherence to regulations with an increase in reporting transparency and accountability enabled by traceable, real-time reporting.
Currently, charities may only have one raffle licence at a time, and must submit their reports from a previous raffle before being issued the next raffle licence. Participants were generally supportive of the AGCO allowing concurrent licensing (i.e., more than one raffle licence at a time for charities). Feedback included:
- Concurrent licensing could allow charities more flexibility and if they can manage multiple raffles at a time, they should be allowed to do so.
- There is a risk that concurrent licensing may increase competition and cause cannibalization within the market.
- There could be a limit on a concurrent licence (e.g., maximum two at a time per charitable licensee).
- Use a risk-based model when issuing concurrent licences, where charities with good track records can start their next raffle more quickly than charities with poor track records.
- Consumers may be confused by charities running multiple raffles at the same time.
Opportunities for increased flexibility
Participants raised a number of opportunities for the AGCO to build a regulatory framework that is flexible enough to facilitate innovation and to enable charities to run raffles in a way that suits their specific circumstances and maximizes the potential benefits while maintaining honesty and integrity standards. Some participants noted that the Criminal Code amendment opens up the possibility to fundamentally change how charitable gaming is delivered in Ontario. There may be an opportunity to examine the potential scope of games that are considered “raffles” to expand the options that charities have in the games they offer to Ontarians. Other specific opportunities for increased flexibility include:
- Allow pooled electronic raffles (e.g., across municipalities or charities).
- Provide greater flexibility in how 50/50 raffles can be conducted, for example, allowing raffle tickets to be sold prior to an event to promote the event through the raffle.
- Allow the electronic raffle to run over the course of several days to align with multiple-day events.
- Continue to allow corporate partnerships or local businesses to advertise on electronic raffle tickets.
- Provide charities with the option to conduct raffles electronically or paper-based, depending on their circumstances.
- Allow electronic payment, cash payment, or a combination of both electronic and cash payments to be made for raffle tickets and prizes.
- Allow suppliers to do some of the administrative work of charities as an optional service, which could reduce some of the risks of using electronic solutions.
- Allow suppliers to charge a percentage fee instead of a flat rate to charities.
- Be as flexible as is possible approving alternative sales channels (i.e., mobile, online) as this provides more opportunity to maximize charitable revenues while minimizing administrative costs.
- Consider allowing unclaimed prizes to be used to seed jackpots and reducing the amount of time a charity is required to keep an unclaimed prize.
- Framework should separate the “sale of a ticket” component from the rest (specifically “selection of a winner”) so that smaller charities can choose to just sell tickets online but not have to use an electronic random number generator to select the winning ticket.
Currently, there is no limit on the expenses for charitable raffles in Ontario, although several other Canadian jurisdictions do have them in place, generally at 20-30% of anticipated total revenue. Participants had a variety of opinions about whether an expense limit would be beneficial or harmful for charities running raffles. Some of the feedback included:
- Without expense limits, suppliers will charge higher fees that may be too high for smaller charities. Having expense limits will ensure that supplier fees remain reasonable.
- Expense limits should not be put into place as they would add regulatory burden and limit decision making for organizations, particularly around advertising and marketing.
- Rather than imposing expense limits, AGCO should just monitor expenses, and flag outliers whose expenses are higher than might be expected.
- Expense limits could be in place, but have different limits for different sizes of charities or different types of draws.
- The AGCO could cap the amount a supplier can take from the profits rather than having a limit for overall expenses.
Strategies to ensure charities can benefit
There are many potential benefits for charities with the use of computers for raffles. The AGCO wants to develop the regulatory framework in a way that makes electronic raffles as accessible and as beneficial to charities as possible, including finding ways to reduce administrative burden on charities and suppliers.
General Comments from Participants
- More options of registered suppliers with approved solutions could lead to more competitive fees and more choices for charities, making it more feasible for charities to use electronic raffles and also see the most benefit from them.
- There is concern about charities’ ability to recover the costs associated with electronic raffles.
- A portion of the industry may not be interested in holding electronic raffles if it is difficult to implement the electronic solution, or if the cost, complexity, or training requirements will be prohibitive.
- The AGCO could collect and make available electronic raffle data such as initial sales, administrative expenses, and/or net revenues to help charities make decisions around the use of electronic raffles.
Reducing Administrative Burden
- There should be as much consistency as possible between both traditional and electronic raffle regulatory frameworks.
- Minimize manual reporting processes to the AGCO.
- The AGCO could make available a list of registered suppliers with approved electronic raffle solutions so that charities can educate themselves on what is available in the market.
- Current terms and conditions are complicated and confusing – increased clarity around regulatory expectations would help charities to ensure that they are following the rules. There may also be opportunities to update and streamline the Lottery Licensing Policy Manual.
- The AGCO could consider a risk-based licensing structure where lower risk charities have a more streamlined application process, and higher risk charities need to clear more checks and balances before being issued a licence.
- There is inconsistency among municipalities and the AGCO in the cost of licensing fees and in how they are administered. Having a more consistent approach across the province could reduce confusion.
- Each province has a different regulatory approach, which can be difficult for national charities or suppliers to navigate. There could be more inter-provincial cooperation to streamline some of the rules, or align their licensing and registration processes.
In Ontario, municipalities have the authority to issue licences for raffles with prize boards of under $50,000.
- Consider implementing a robust electronic raffle training program for municipalities.
- Different municipalities may apply the rules differently than the AGCO when issuing raffle licences, and it can get confusing for charities.
- Consider having the AGCO issue all electronic raffle licences in Ontario.
- Municipalities could manage competition within the charitable sector to ensure there are no issues with the market (e.g., oversaturation). The municipal licensing authority would also need to be able to limit the number of online raffle events a charity could conduct each year as well as their duration so as to avoid ‘permanent’ online raffles.
- Municipalities should take responsibility to ensure that the charities they license are aware of the rules and regulations they are required to abide by.
- Municipalities are concerned that the shift to electronic raffles will require more staff time in regards to application and reporting processes.
Providing Information to AGCO:
- Move to an online/electronic application system for licensing that is standardized and contains non-defeatable mandatory fields, to help minimize errors and incomplete applications.
- An online application system would help reduce administrative burden.
- Streamline the existing one-time / per-event forms, or offer an online form that gets sent directly to AGCO.
- AGCO should consider a real-time reporting process for the supplier working with the charity. Rather than monthly reporting being done manually, it could be done in real-time and sent to the AGCO.
- Review and streamline the letter of credit process. Consider allowing banks to send these letters directly to the AGCO, or consider alternatives to the letter of credit.
- Ensure that the new framework does not make electronic raffles so cost prohibitive that smaller charities cannot participate.
- AGCO should not be overly prescriptive on how suppliers develop their fee structures. It was felt that this will allow suppliers to charge a more reasonable rate to deliver their service, and therefore, deliver more net dollars to the charity.
- Costs associated with cybersecurity and IT risk mitigation may offset potential savings from reduced paper and postage.
- Consider having the winner incur a portion of the expense costs for 50/50 draws, by taking out expenses before splitting the pot, instead of having all of the expenses coming out of the charity’s 50% share.
- Consider allowing paid staff (i.e., ticket sellers) compensation based on or tied to their ticket sales.
Risks related to Electronic Raffles
Identifying the risks related to electronic raffles is crucial for the development of the AGCO regulatory framework, which will be focused on mitigating those risks. A risk-based approach will allow the AGCO to direct its attention to the areas that matter most from a regulatory perspective.
What We Heard
Risks Related to Game Integrity and Cybersecurity
While electronic raffles have the potential to improve game integrity and security, there are also concerns and specific risks related to the use of computers. Participants brought up the following potential risk areas related to the use of technology.
- Cybersecurity issues may be a new and different risk to many of the charities that will be getting involved in electronic raffles.
- Cybersecurity issues are hard to predict and any indication that the security of a system can be compromised in regards to handling payments, deposits, and raffle and consumer information, or a weak random number generator may have a negative impact on the integrity of the raffle, may impact the success of the raffle, and could undermine the entire sector if public confidence is affected.
- It is important that the system has proper tracking and monitoring capabilities to ensure that all aspects of a raffle are conducted fairly and with integrity.
- Raffle activities suggested to be monitored or reported on include but are not limited to, the selection of winners, administration of tickets, distribution of prizes, expenses by operators, any suspected integrity issues with the raffle and the use of raffle proceeds.
- In addition to establishing a secure electronic environment, the physical environment must also be secure.
- If one charity has a high-profile problem with their electronic system, it could hurt the industry as a whole.
- Volunteers play an important role in charitable raffles. It is not uncommon for there to be regular turnover of volunteers, and this may pose challenges for charities to ensure that volunteers are properly trained on the electronic raffle solutions.
- Charities are unlikely to have the expertise to deal with potential technical issues with the electronic raffle solutions.
Participants had a number of ideas for strategies for mitigating the risks that may accompany electronic raffles, including:
- The AGCO should ensure that suppliers develop electronic raffle systems using sound software development and testing methodologies.
- Designing the system from the ground-up will help to limit threats.
- Access to the IT infrastructure must be limited, and all access must be recorded and auditable.
- Implement a proper authentication (e.g., two factor authentication, strong password policies), authorization (e.g., role-based access control), and strong encryption (multiple levels).
- Servers, networks, and workstations must be hardened, patched and have anti-malware software installed, as well as intrusion detection and prevention systems.
- Random number generators must be thoroughly assessed prior to being permitted as part of an electronic raffle system.
- Tickets must contain security features to prevent the creation of fraudulent tickets.
- A backup could be provided both locally, and remotely via internet cloud, or offsite co-location remote server.
- AGCO should have clear technical standards, and ensure that suppliers understand what is required and that they are accountable for meeting the technical standards.
- AGCO should consider allowing for third party technical assessments as part of the regulatory framework.
- Ensure that all automated electronic raffle solutions adhere to industry standard best-practices. Examples include:
- Gaming Labs International Standards
- GLI-27 (Network Security Best-Practices)
- GLI-31 (Electronic Raffle Systems)
- The electronic raffle system should be able to generate financial records and reports in real-time.
- The ability to accept electronic payments is seen as a huge benefit by the industry, and will reduce the amount of cash on hand at events and provide a convenient way for customers to purchase raffle tickets. Participants did acknowledge that risk related to electronic payments would have to be mitigated to ensure payments are made by the authorized cardholder and not with stolen cards or by minors. Consider placing more stringent requirements for those running electronic raffles with larger prize boards.
- The AGCO should make public:
- The process to conduct technical assessments of electronic raffle solutions;
- The checks-and-balances required to ensure the solutions are secure;
- Third party testing (if any); and
- Resolutions to electronic raffle complaints.
- The technical standards should be the responsibility of the supplier. There should be a clear separation between the technical and any operational requirements, and operational standards should not be included in any AGCO Technical Standards.
- The AGCO should require charities to have a plan for responding to, escalating, and resolving cybersecurity and IT infrastructure issues related to electronic raffles.
- The AGCO should conduct random inspections/audits of suppliers and charities.
- The AGCO should consider requiring charities to have an expert available to help with any technical issues.
Mitigating Training Concerns
- The AGCO should be the sole licensing authority, at least initially, to control the number and types of electronic raffles that are licensed. This may also help charitable organizations gain a better understanding of how the new licensing scheme will work, and lay the groundwork for municipal licensing moving forward.
- The AGCO should provide education and training for charities, suppliers and municipalities on their roles and responsibilities.
- Ensure that the Terms and Conditions for electronic raffles are clear so as to minimize confusion and inconsistent application.
Participants indicated they would like the AGCO to provide information and supports to help charities engage productively with registered gaming related suppliers. Helpful information could include:
- an explanation of what certifications or required documentation charities should be looking for from a supplier;
- a list of approved suppliers complete with contact information;
- an example of a contract between a charity and supplier; and/or
- an explanation of charities’ rights and responsibilities.
Promoting responsible gambling is a key priority for the AGCO. We want to ensure that vulnerable people, including minors and at-risk individuals are not targeted by electronic raffles, and that advertising or marketing materials are not misleading to the public. It is important that players understand the rules of play, their chances of winning, and the outcome of the raffle. If players are experiencing problems with gambling, they should be able to easily find the resources they need to get help.
What We Heard
- There is very little evidence or research on problem gambling issues specifically related to charitable raffles.
- Responsible gambling risks depend on game design. Some raffle games may inherently be higher risk than others because of the way that they have been designed.
- Charitable electronic raffles do not necessarily pose much risk for responsible gambling as long as the games that will be offered by charities do not offer instant gratification and remain very similar to existing paper raffles. However, if the rate of play for electronic raffles is faster, there may be more risks with respect to problem gambling.
- Increased variety in the types of games being offered creates a greater challenge for responsible gambling education.
- Lack of human contact when buying raffle tickets may encourage people to overspend, or buy more frequently. It is also easier to overspend when using a credit card rather than cash.
- Participants tend to see charitable gaming wagers as donations and fundraising rather than as a form of gambling, and so often responsible gambling messaging is not considered.
Risks related to Marketing/Advertising:
- To obtain a competitive edge, game designs, marketing, and advertising may start to push the boundaries of traditional charitable raffles.
- If charities are looking to grow their revenue through electronic raffle channels, this may significantly increase the gambling footprint in Ontario, and lead to more problem gambling.
Risks related to Players:
- Real-time jackpot information draws more attention and creates excitement and the potential for consumers to spend more than they can afford.
- There is always a need to ensure minors cannot access gaming.
- Some players may feel like they are donating money to a charity rather than gambling – this may lead them to overspend.
Suggestions for Responsible Gambling Risk Mitigation Strategies:
- The AGCO can ensure that responsible gambling controls are built into all approved product packages offered by suppliers – including age verification methods, customer education information, and information about problem gambling services.
- The AGCO can mandate responsible gambling messages and signage for all raffles, including on all electronic 50/50 raffle related material, including raffle tickets themselves.
- Charities should ensure that individuals involved in the raffle are appropriately trained on any responsible gambling requirements.
- Ensuring players have knowledge of the raffle rules and draw information. Rules, odds of winning and prizes need to be accurately and clearly presented so that players have meaningful information to make decisions.
- Establish a maximum purchase limit to prevent players from spending outside of their means.
- Consider a voluntary purchase amount limit for electronic raffles, if feasible.
- Player information from online purchases could be tracked and monitored for signs of at-risk gambling.
Path Forward – A Phased Approach
With the consultation period now complete, the AGCO’s Developing a Regulatory Framework for Electronic Raffles in Ontario project will proceed to its next stage, with the release and subsequent implementation of a regulatory framework for electronic raffles in Ontario. The electronic raffle framework will establish the conditions under which charities may use computers for the sale of raffle tickets, selection of a winner, and the distribution of a prize, if they choose to do so. The valuable input received from the consultation period, as well as the lessons learned through the interim framework, will inform the AGCO’s decision-making.
While the AGCO has been primarily focused on electronic raffles, there may be some opportunities to implement changes to the framework for traditional paper-based raffles and charitable lotteries more broadly, to benefit all charities conducting lottery events, not just those conducting electronic raffles.
The AGCO would once again like to extend its sincere appreciation to the many stakeholders and partners that dedicated their time, effort and energy to provide their input and advice.
Appendix - Stakeholder Roundtables
- Provincial Responsible Gambling Policy Roundtable - November 18, 2016
- Mega Raffle Charities Working Group - November 21, 2016
- Suppliers - December 13, 2016
- Commercial Gaming Association of Ontario (CGAO) - January 11, 2017
- Ontario Charitable Gaming Association (OCGA) and other Charities – January 23, 2017
- Charities and Sports Organizations - January 25, 2017
- Municipalities – February 1, 2017
- Suppliers - February 7, 2017
- Ontario Lottery and Gaming Corporation – February 24, 2017
Please find a downloadable version of the Electronic Raffle Findings Report here.