Lotteries are a popular form of gambling in Canada, with millions of Canadians buying lottery tickets every year in the hopes of winning big. But who actually runs and operates the lottery systems across the country? Is the lottery in Canada government-run, or are private companies involved?
The short answer is that while provincial governments oversee and regulate lotteries, the day-to-day operation and management of lottery games are handled by provincial crown corporations or private firms. Lotteries generate significant revenue for provincial governments through ticket sales and profits. However, the government does not directly run lottery games itself.
Provincial Oversight and Regulation
Under Canada’s Constitution, provinces have jurisdiction over lottery policies and operations within their borders. Each province has established its own provincial lottery corporation or licensing framework to control and manage lottery activities.
For example, the Ontario Lottery and Gaming Corporation (OLG) was created in 1975 to run lottery games on behalf of the Government of Ontario. The OLG reports to the provincial Minister of Finance and is responsible for conducting and managing slot machines, casinos, lotteries and internet gaming sites. Lottery revenues generated by OLG provide funding for Ontario government programs and initiatives.
While provinces have authority over lotteries, the federal government does have a regulatory role when it comes to criminal law and tax policies related to gambling. Provinces must operate lotteries within the boundaries set by federal statutes like the Criminal Code.
Provincial Lottery Corporations
Most provinces have established provincial crown corporations that are mandated to conduct and manage lottery schemes on behalf of the provincial government. These lottery corporations have a monopoly within their jurisdiction to operate games like lotto draws, scratch cards, sports betting and more.
Here are some of the main provincial lottery corporations in Canada:
- British Columbia Lottery Corporation (BCLC) – only authorized lottery operator in BC
- Western Canada Lottery Corporation (WCLC) – operates lotto games in AB, SK, MB
- Ontario Lottery and Gaming Corporation (OLG)
- Loto-Québec – manages lottery, casino, bingo in Quebec
- Atlantic Lottery Corporation – serves NL, PE, NS, NB
These provincial crown corporations operate under gaming mandates set by their government. While they conduct day-to-day lottery operations, they ultimately report to their provincial finance ministry or gaming authority on matters like revenue generation, responsible gambling, and more.
Private Sector Involvement
While provincial lottery corporations run lotteries in most of Canada, some provinces also utilize private sector firms to manage and operate lottery gaming under provincial oversight.
For example, in Manitoba the Western Canada Lottery Corporation (WCLC) handles pan-Canadian lotto games. However, Manitoba Liquor & Lotteries also licenses private businesses to run video lottery terminals (VLTs) and casinos under provincial regulation.
In Ontario, the OLG occasionally uses private operators to manage casinos and lottery terminals. However, the OLG maintains overall authority and the Ontario government still collects revenue.
Indigenous Lotteries and Gaming
Some Indigenous groups in Canada also operate their own lottery systems separate from provincial frameworks, as part of their gaming and economic development strategies.
For example, the Mohawk Council of Kahnawà:ke in Quebec has established its own Kahnawà:ke Gaming Commission to regulate gaming activities like lotteries within the Mohawk Territory. Kahnawà:ke operates Mohawk Online, an internet gaming site that offers poker, sports betting and more to customers located within Canada.
Revenues raised from Indigenous gaming schemes stay within the community to fund local programs and services. While Indigenous gaming must still comply with aspects of the Criminal Code, they operate independently from provincial lotteries.
Lottery Games Offered
Provincial lottery corporations and licensed operators offer a wide range of lottery games across Canada. Here are some of the most popular lottery games that Canadians can play:
Lotto 6/49
The national Lotto 6/49 draw is administered by the Interprovincial Lottery Corporation on behalf of the five regional lottery corporations. Lotto 6/49 is played by selecting six numbers from 1 to 49. Draws take place twice weekly, on Wednesdays and Saturdays. Lotto 6/49 regularly has multimillion dollar jackpots.
Lotto Max
With pan-Canadian draws on Tuesdays and Fridays, Lotto Max is a popular nationwide lottery game with jackpots that can exceed $50 million. Players pick seven numbers from 1 to 50.
Daily Grand
This national daily lottery features a top prize of $1,000 per day for life. Players choose five main numbers from 1 to 49, as well as a Grand Number between 1 and 7.
Scratch and Win Games
Instant scratch card lottery tickets offer the chance to win prizes immediately. Games like Crosswords, Bingo, and Monopoly are popular scratch games.
Sports Lotteries
Lotteries tied to sporting events like hockey, basketball and football are available from provincial gaming authorities. Sports lotteries allow you to wager on game outcomes.
Provincial Draw Games
Provincial lottery corporations offer region-specific lotto games only open to local residents. Ontario’s Lotto MAX, BC’s Lotto!, Quebec’s Québec Max and the Atlantic Tag are examples.
Are Lottery Winnings Taxable in Canada?
Lottery winnings are considered taxable income under the Canadian Income Tax Act. When you win more than $1 from a lottery draw, the prize money is subject to taxes. Here are some key tax rules for lottery winnings:
- For jackpots and lump sum payments, 25% tax is withheld at source before you receive your winnings.
- If you receive your lottery prize in annuity installments over many years, no tax is withheld. But you must report annual installments as income.
- The lottery prize itself and any interest earned are considered taxable income.
- As a Canadian resident, you must report all lottery winnings when filing your income tax return.
- Non-resident winners also pay a 25% withholding tax on Canadian-sourced lottery winnings.
Consult a tax professional to ensure you meet all reporting requirements for lottery prizes.
Are Lottery Winnings Taxed Differently Across Provinces?
While the federal tax treatment of lottery winnings is consistent country-wide, some differences can emerge in provincial taxation.
Some points on provincial taxes on lottery winnings:
- Provincial personal income tax rates vary, which affects how much provincial tax you pay on lottery winnings.
- Some provinces have surtaxes that apply to certain income brackets, which could impact taxes owing on a large lottery prize.
- A few provinces do not tax some types of lottery winnings at all below a threshold.
- Quebec collects its own Quebec Pension Plan contribution on lottery winnings.
Check with a tax expert or provincial taxation authority to learn more about provincial tax rules for lottery prizes.
Other Common Lottery Tax Questions
Beyond the basics, some other frequent questions arise around tax implications for lottery winnings:
Are lottery winnings taxed at source?
Yes, lottery corporations withhold tax before you receive jackpot or lump sum payments. For multi-year annuity payments, tax is not withheld but must be reported/paid annually.
Can lottery winnings be split with family to reduce taxes?
No, lottery claims must be made in a single name. But if you gift money to family after, tax rules on gifts/income splitting may apply.
Can you claim gambling losses against lottery winnings?
No, expenses and gambling losses cannot be deducted from lottery winnings under Canadian tax law.
Are foreign lottery winnings taxable in Canada?
Canadian residents must report foreign lottery wins. Tax treaties with some countries may impact taxes paid on the winnings.
Do lottery winnings affect tax brackets or credits?
Yes, a large lottery prize could potentially bump you into a higher federal or provincial tax bracket for the year. Some refundable tax credits may also be reduced.
Sales Statistics for Lottery Tickets in Canada
Lottery ticket sales generate substantial revenue for provincial governments each year. Here are some key statistics on lottery ticket sales across Canada:
| Province | 2016-17 Lottery Revenue | Per Capita Sales |
|---|---|---|
| Ontario | $3.8 billion | $271 |
| Quebec | $1.4 billion | $170 |
| Western Provinces | $1.1 billion | $249 |
| Atlantic Provinces | $408 million | $419 |
| Canada Total | $6.8 billion | $188 |
Sources: Government of Canada; provincial annual reports
As shown, Ontario generates the most lottery revenue due to its large population, but Atlantic Canadians spend the most per person. Nationwide, Canadians spent approximately $188 each on lottery tickets in 2016-17. Lottery ticket sales have increased steadily since the 1990s.
Major Lottery Wins in Canada
Over the decades, there have been many notable lottery wins across the various provincial and national games:
- In July 2022, a lottery player in BC won a record $70 million Lotto Max jackpot.
- A Lotto 6/49 ticket sold in Quebec won $65 million in June 2022, the biggest prize in that game’s history.
- A 2017 Lotto 6/49 draw awarded a $60 million jackpot to a ticket holder in Ontario.
- In November 2022, a Lotto Max player in Ontario split a $128 million jackpot with another winner.
- A winning Lotto 6/49 ticket sold in Calgary earned one lucky Albertan a $63.6 million prize in October 2021.
The largest single Canadian lottery prize went to a Lotto Super 7 player in Edmonton in 2005, claiming $54.3 million. Lottery giants like Ontario and Quebec have produced many of the biggest jackpot winners over the years.
Advantages of Government-Run Lotteries
While provincial governments do not directly operate lotteries themselves, having provincial organizations manage lottery systems provides some benefits, including:
- Generating reliable, responsible revenue for provincial programs and services.
- Ability for provincial governments to closely monitor lottery operations and prevent misuse.
- Consistent province-wide oversight and coordination of lottery games.
- Uniform marketing and responsible gambling standards applied by provincial authorities.
- Profits can be redistributed to support communities across a province.
With provincial crown corporations running lotteries, governments can ensure a consistent approach aligned with public policy priorities.
Criticisms of Government Lotteries
There are also criticisms made about the lottery system and government involvement in gambling, such as:
- State-run gambling still carries social risks of addiction.
- Lotteries tend to have disproportionate participation from low-income groups.
- Marketing encourages excessive spending on lottery tickets.
- Little competition or innovation when one provincial operator has a monopoly.
- Too much government reliance on uncertain lottery revenue.
While looking to lotteries for funding public programs makes financial sense for provinces, it does have implications from a public policy lens.
Conclusion
In Canada, lottery games are run by provincial crown corporations or private operators under contract to provincial governments. While provinces oversee and regulate lotteries within their borders, they are not directly operated by provincial governments. This model allows provinces to generate substantial revenue from lotteries in a controlled manner, while also delegating day-to-day operations to an arm’s length provincial agency or private partner. There are advantages to this approach in terms of oversight and financial benefits. However, it has received criticism from those concerned about state-sponsored gambling or excessive dependence on lottery funding. Overall, the provincial government model has enabled lotteries to become entrenched across Canada while ensuring a regulated approach aligned with public policy interests.