Court File and Parties

Court File No.: CV-18-592163 Date: 2018-09-04 Ontario Superior Court of Justice

Between: PLAY FOR FUN STUDIOS INC., Applicant – and – REGISTRAR OF ALCOHOL, GAMING AND RACING, Respondent

Counsel: S.C. Hutchison, for the Applicant S.S. Mathai and A. Sinnadurai, for the Respondent

Heard: May 31, 2018

Reasons for Judgment

SCHRECK J. :

[1] GotSkill is a game played on a video terminal with a touchscreen and is found in bars and other establishments throughout Ontario. Each time a person plays the game, she is told how much she may be able to win and is asked to make a wager. The player then participates in a skill-testing exercise, the results of which will depend on the quickness of her reflexes. How much she ultimately wins will depend on how well she performs. Once the round is complete, the player is provided with an opportunity to play again and is notified of the potential win for the next round, which may be more or less than for the previous round. The player is only aware of how much she stands to win for the round she is playing. She does not know the potential win for the next round until the earlier round is complete.

[2] Games of skill at which one can win money are legal. Games of chance or mixed skill and chance are not. Play For Fun Studios Inc., the distributor of Gotskill, says that it is a game of skill because players know how much they stands to win when deciding to play and how much they win depends entirely on their skill. It has brought an application pursuant to Rule 14 of the Rules of Civil Procedure, R.R.O. 1990, Reg. 194 for a declaration to this effect.

[3] The respondent, the Registrar of Alcohol, Gaming and Racing, says that Gotskill is a game of mixed skill and chance. While players knows how much they stand to win in each round, how much they may win in the next round is a matter of chance. Since players typically play a number of times, how much they are ultimately able to win depends on both their skill and chance.

[4] For the reasons that follow, the application is granted.

I. FACTS

A. How Gotskill Works

(i) Introduction

[5] Gotskill consists of a terminal with a touch screen. A person wishing to play GotSkill must purchase game tokens, which are provided electronically on a card which the player can swipe on the terminal. When the card is swiped, the game’s terms and conditions appear on the screen. The player must accept these in order to play. At the commencement of the game, the player is asked to choose one of a number of different “themes”, which are cosmetic and which have no impact on how the game is played.

[6] The parties provided me with a tablet on which Gotskill had been installed in order to allow me to play it (without actually wagering money). I did so several times.

(ii) The “Potential Next Win” and the “Amusement Phase”

[7] Once a theme is chosen, the terminal displays the “potential next win”, which represents the amount the player can win if she chooses to place a wager. Whether or not the player wins will depend on her ability to complete the “skill task” described below. Of note, the value of the potential next win is pre-determined and the player is aware of it before deciding whether or not to play.

[8] If the player chooses to play, he or she must decide how many credits to wager. The amount of the wager depends on the value of the “base entry”, which will be between eight and 25 credits, and the “entry level”, which is a number by which the base entry is multiplied. Each theme has a fixed base entry which may vary between themes. The player is able to increase or decrease the entry level and thereby choose how much to wager. Thus, before deciding whether or not to play, the player is aware of the potential next win and has chosen how much she wishes to wager.

[9] After the player has determined how much to wager, the game proceeds through an “amusement phase” which consists of various onscreen animations resembling a slot machine. This has no impact on the outcome of the game.

(iii) Where the Potential Next Win is Greater than Zero -- The “Skill Task”

[10] If the potential next win is greater than zero, the player is given an opportunity to perform the “skill task”. This consists of a cursor moving back and forth at a constant speed across an area with 21 bars. Each bar is assigned a percentage value of between 55% and 110%. Once the player presses the “stop button”, the cursor stops moving. The challenge is to stop the cursor as close to the middle of the area as possible. The closer the cursor is to the middle when it stops, the greater the percentage. The outcome depends entirely on the player’s hand-eye coordination. Once the game is complete, the player’s “actual win” is the product of the percentage value and the amount wagered.

[11] There does not appear to be any dispute that this aspect of the game is dependent solely on skill and not chance.

(iv) Where the Potential Next Win is Zero

[12] If the potential next win is zero, then the player can choose whether to continue playing. If she does, then she must wager the minimum number of credits. Doing so will result in the amusement phase, but the player will not be provided with any opportunity to complete the skill task and will necessarily lose the amount she has wagered. The player will then be presented with a new potential next win.

B. How the Game is programmed to Work

[13] The value of the potential next win is pre-determined. The values come from “tickets” which the game selects from a list of 1,000 tickets contained in a “file”. Files are arranged in groups of 1,000, which are known as “pools”. Each theme on each terminal has its own set of pools.

[14] The first ticket is randomly selected by the game the first time it is played. Thereafter, the tickets are selected in the sequence in which they appear in the file. When one player finishes playing, the next player’s potential next win will be based on the next ticket in the sequence. The sequences of the tickets is initially randomly generated, but steps are taken to avoid there being too many zero-value tickets in a row.

[15] Players do not have access to the tickets. As a result, while a player knows the potential next win for the round she is about to play, she does not know what the potential next win will be for the following round any after that.

C. Possible Outcomes Over Multiple Plays

[16] Files are designed in such a way that if a player were to play all 1,000 tickets and score 100% on the Skill Task every time, she would receive an overall pay out of 94% of the amount wagered. A player who scores 110% each time will win more than she wagers. As described in the affidavit of the applicant’s Chief Executive Officer, “[i]f the player consistently obtains 110% on the Skill Task then they can ‘beat’ the game and receive a profit.” The respondent did not challenge this evidence.

D. Evidence of How the Game is Used

[17] Gotskill is currently in approximately 190 licensed bars and restaurants in Ontario.

[18] There was evidence on the application that players in Ontario spend on average 25 to 30 minutes on the game at a time and use 1600 credits ($16), not including any credits they win.

II. THE STATUTORY CONTEXT

[19] As noted, GotSkill is currently in approximately 190 bars and restaurants in Ontario which have liquor licences issues by the Alcohol and Gaming Commission of Ontario pursuant to the Liquor Licence Act, R.S.O. 1990, c. L.19 (“LLA”).

[20] Section 45(1) Licences to Sell Liquor, R.R.O. 1990, Reg. 719 to the LLA provides as follows:

45. (1) The licence holder shall not permit drunkenness, unlawful gambling or riotous, quarrelsome, violent or disorderly conduct to occur on the premises or in the adjacent washrooms, liquor and food preparation areas and storage areas under the exclusive control of the licence holder. [Emphasis added].

[21] Counsel agree that “unlawful gambling” includes the playing of a “game” as defined in s. 197(1) of the Criminal Code, R.S.C. 1985, c. C-46, which states:

197(1) In this Part,

“game” means a game of chance or mixed chance and skill.

III. ANALYSIS

A. The Issue

[22] The issue to be determined on this application is whether GotSkill is a “game” as defined in s. 197 of the Criminal Code. The parties agree that GotSkill involves at least an element of skill, so the determination of the issue will depend on whether it is a game of skill or a game of “mixed chance and skill”.

B. The Meaning of “Chance”

[23] The meaning of “chance” in the context of s. 197 was explained in R. v. Riesberry, 2015 SCC 65, [2015] 3 S.C.R. 1167, at para. 11, where the Court adopted the definition in the earlier case of R. v. Ross, Banks and Dyson, [1968] S.C.R. 786, at p. 791:

There must be a “systematic resort to chance” to determine outcomes, not merely the “unpredictables that may occasionally defeat skill”.

Thus, the fact that a tennis player may lose a game because of the effect of the wind on the ball does not make tennis a game of chance. On the other hand, card games such a poker, where the outcome depends in part on which cards a player happens to draw, clearly involve a “systematic resort to chance”.

[24] In determining whether there is an element of chance, it is the perspective of the player that must be considered, as was made clear in R. v. Topechka, [1960] S.C.R. 898, at p. 900:

What the law forbids is a machine that by electronic devices or other means, defeats the ability of the player to obtain favourable results. To be within the law, the player must control the game, and not be at the mercy of a machine where skill is not the only element, as it is in the present case.

When the Act speaks of a matter of chance or uncertainty to the operator, it refers obviously to the machine itself which may produce different results independently of the skill of the player. I think this is the letter and spirit of the law.

[25] Any game that is based on mixed chance and skill will fall within the definition in s. 197, regardless of which element is dominant. In other words, as long as there is any element of chance, the game will meet the definition in the Code: Ross, at p. 792.

[26] However, as noted in R. v. Balance Group International Trading Inc. (2002), 162 C.C.C. (3d) 126 (Ont. C.A.), at para. 3, “merely because some elements of the game are out of the control of the player does not make the game one of mixed chance and skill.”

C. The Proper Characterization of the Game

[27] It seems clear that any one round of GotSkill, that is, the placing of a single wager, involves skill, not mixed chance and skill. The player knows how much she stands to win or lose before deciding whether to play, and the amount she ultimately wins or loses depends entirely on her skill in completing the skill task. Based on this, the applicant submits that GotSkill is clearly a game of skill.

[28] The respondent takes a different position. Counsel submits that the correct approach is not to examine the circumstances of a single wager, but rather to consider the game as it would be played by an ordinary person. An ordinary person is likely to place multiple wagers during a playing session. How much the player is liable to win or lose overall will depend on what the potential next win is for each wager. From the player’s perspective, the potential next win is the result of chance. What induces a player to keep playing is the prospect of the next potential next win being larger.

D. Relevant Authorities

(i) The Gum Dispenser Cases

[29] Counsel referred to me to a series of older cases which raised similar issues arising out of the operation of a type of vending machine that was in use in stores at the time. The way the machines worked was that the user would insert a coin, pull a lever, and then receive something from the machine, such as a piece of gum or tokens that could be used to purchase items at the store. The user would know prior to inserting the coin what the machine would dispense, but would not know what prize would be available the next time. Whether or not these were games of chance was the subject of conflicting appellate authority.

[30] The Ontario Court of Appeal concluded that these were games of chance in R. v. O’Meara (1915), 25 C.C.C. 16 (Ont. C.A.), at p. 20:

It needs only to state the transaction to realise that each depositor was taking part in a game of chance. It is true that he need not again pull the lever nor avail himself of good fortune if it offered, but that may be said of the winner of any gaming stake or lottery prize. It may also be that the proprietor of the machine, knows exactly how many blanks there are to the prizes, or how often, or even in what order, the different combinations will or can appear, or it may be that there is a fixed order. But, even if that were shewn to be so, the whole operation is still one of pure chance, so far as the depositors are concerned, with no element of skill.

There is no evidence as to the value of the gum (which in Rex v. Stubbs, 31 W.L.R. 109, 567, was stated to be one cent); but, if there was no profit on supplying a package for 5 cents, then the amount of the prizes must have been supplied at a loss to those controlling the machine. If there was a profit, then the prizes were really contributed by the depositors. In either case, there was a loss to counterbalance the winning — and both brought about by chance.

[31] In coming to this conclusion, the Court in O’Meara disagreed with the majority decision in R. v. Stubbs (1915), 24 C.C.C. 60 (Alta. S.C.A.D.), but agreed with and adopted the dissent by Harvey C.J., who had stated (at pp. 304-305):

I think the magistrate was quite right in saying that if there were nothing more involved than putting in five cents and taking out what the indicator shews you will receive there would be no game played any more than in obtaining a postage stamp from an automatic vending machine. It seems absolutely clear to me that what the operator in nine cases out of ten spends his five cent piece and in all cases spends his five cent trade check for is the chance of some trade checks in the next operation of the machine, and that is where the chance is. I do not see that the game can be said to be confined to a single operation of the machine any more than a game of poker could be said to be confined to one draw of the cards. If no man were permitted to operate the machine twice in succession it would be the case so long as there could be no collusion between him and another to operate for each other, but also all incentive to operate the machine would thereby be gone. As it is, with the privilege of operating the machine more than once, the operator’s game is to put in nickels or checks for the purpose of getting back something more valuable, and that is not gum. Having control of the machine and thereby the right of the next operation, there is a chance in a single throw, not a chance of what will be discharged from the machine, but a chance of what may be shewn on the indicator as what the operator will receive in the next operation. In that is the chance, and that is the game he is playing. [Emphasis added].

Conclusions similar to that reached in O’Meara and the dissent in Stubbs were reached in R. v. Ross (1924), 57 N.S.R. 508 (S.C.) and R. v. Gerasse (1916), 26 C.C.C. 246 (Man. K.B.).

(ii) Slot Machines

[32] The applicant acknowledges that there is a similarity between the type of game at issue in Stubbs and O’Meara and Gotskill, but submits that the real issue in the earlier cases was whether the game met the Criminal Code definition of a “slot machine”, which is now found in s. 198. As was explained in R. v. Currie (1975), 26 C.C.C. (2d) 161 (Ont. C.A.), at p. 175, the definition includes not only games of chance or mixed skill and chance, but pure skill as well. As the applicant points out, that definition was part of a legislative scheme that included a presumption that any establishment containing a slot machine was deemed to be a common gaming house. Because the definition of “slot machine” included games of pure skill, whether or not Gotskill is similar to the gum dispensing machine in Stubbs is, according to the applicant, a “red herring”.

[33] While the applicant is correct that a “slot machine” need not be a game of chance or mixed chance and skill, the decision in O’Meara did not turn on whether the device in question was a “slot machine”.

[34] The history of the “slot machine” provisions in Criminal Code was extensively reviewed by Martin J.A. in Currie, at pp. 168-175. The term “slot machine” did not appear in the Code until 1938: Currie, at p. 171. An earlier version of the Code referred to “automatic machines” that were “used for vending merchandise or for any other purpose, the result of one or any number of operations of which is as regards the operator a matter of chance or uncertainty, or which as a consequence of any given number of successive operations yields different results to the operator.” Such machines were “deemed to be a means or contrivance for playing a game of chance”: Currie, at p. 168.

[35] The deeming provision that eventually came to apply to slot machines first appeared in the Criminal Code in 1924: Currie, at p. 168. Prior to that, a “common gaming-house” was defined in s. 226 of the Criminal Code, R.S.C. 1906, ch. 146 as a place used by people to play “any game of chance, or any mixed game of chance and skill”. It was this definition, which is identical to the one in s. 197 of the current Code, which was considered in Stubbs and O’Meara, both of which were decided prior to the 1924 amendment. It follows that those decisions are relevant to the issue that must be determined in this case.

(iii) The Rationale in O’Meara

[36] It would appear that the conclusion of the Court in O’Meara and the dissent in Stubbs was based, at least in part, on the fact that although a player knew the outcome when deciding whether to play, in many cases the only incentive to play was the prospect of a better prize on the subsequent instance of play. When a person chooses to spend a nickel in order to obtain a piece of gum worth a penny, which was the situation in Stubbs, it is reasonable to infer that he has chosen to spend his money not for the purpose of obtaining the gum, but rather for the opportunity of being able to obtain something of greater value the next time. Whether or not he has that opportunity depends on chance.

E. Conclusion

[37] I agree with the respondent that the issue in this case must be considered from the perspective of the player who plays multiple times. It follows that the reasoning in O’Meara is applicable to this case. The player of Gotskill who is presented with a potential next win of zero is in the same situation as the person who must decide whether to spend a nickel in order to obtain gum worth a penny. As described in one of the older cases, “[t]he bait is the hope springing ‘eternal in the human breast’ that he will, sooner or later though not immediately, receive … more than he has paid….”: R. v. Arnold (1927), 48 C.C.C. 101 (Ont. C.A.), at p. 104. The incentive in continuing to play is in order to gain an opportunity to win a greater prize which may or may not be available, depending on chance.

[38] However, the fact that some elements of the game are out of the player’s control does not necessarily make Gotskill a game of mixed chance and skill: Balance Group International Trading Inc., at para. 3. There is one significant difference between Gotskill and the gum dispenser machines. The player of the gum dispenser machines was completely “at the mercy of the machine”: Topechka, at p. 900. No matter how many times he played, he could (and probably would) ultimately end up losing more than he gained and could do nothing to prevent this.

[39] In contrast, the evidence was that a player of Gotskill who continuously obtained 110% on the skill task would ultimately win more than she lost. While how much a player is able to win over the next few plays is a matter of chance, a very skilled player will always be able to come out ahead if she plays long enough. Put another way, the player who has enough skill can “beat” the machine, so the machine cannot “defeat the ability of the player to obtain favourable results”: Topechka, at p. 900.

IV. DISPOSITION

[40] For the foregoing reasons, the application is granted and there will be a declaration that Gotskill is not a game of chance or mixed skill and chance. Neither party seeks costs and none are ordered.

[41] I am indebted to both counsel for their comprehensive and helpful written and oral submissions.

Schreck J. Released: September 4, 2018.