



COURT OF APPEAL FOR ONTARIO

CITATION: Play for Fun Studios Inc. v. Ontario (Alcohol and
    Gaming Commission of Ontario), 2019 ONCA 648

DATE: 20190808

DOCKET: C65943

Juriansz, van Rensburg and Miller JJ.A.

BETWEEN

Play for Fun Studios Inc.

Applicant (Respondent)

and

Registrar of Alcohol, Gaming and Racing

Respondent (Appellant)

Sunil S. Mathai and Ananthan Sinnadurai, for the
    appellant

Scott C. Hutchison and Gabriel Edelson, for the
    respondent

Heard: June 18, 2019

On appeal from the order of Justice P. Andras Schreck of
    the Superior Court of Justice, dated September 4, 2018, with reasons reported
    at 2018 ONSC 5190.

Juriansz J.A.:

[1]

The Registrar of Alcohol, Gaming and Racing (the Registrar) appeals
    from the application judges declaration that the GotSkill gaming system is
    not a game as defined under s. 197(1) of the
Criminal Code
, R.S.C.,
    1985, c. C-46. Section 197(1) defines a game to mean a game of chance or
    mixed chance and skill.

[2]

Play for Fun Studios Inc. (Play for Fun), the owner of GotSkill, applied
    for the declaration. GotSkill is played in almost 200 bars in Ontario. Section
    45(1) of R.R.O. 1990, Reg. 719 under the
Liquor License Act
, R.S.O.
    1990, c. L.19, prohibits unlawful gambling at licensed premises. The parties
    to the application agreed that unlawful gambling includes the playing of a
    game within the meaning of s. 197(1) of the
Criminal Code
. There was
    also no dispute that GotSkill is not a game of pure chance; the issue was
    whether GotSkill was a game of mixed chance and skill.

[3]

The application judge concluded that GotSkill was not a game of mixed
    chance and skill. For the reasons that follow, I believe the application judge
    was incorrect. I would allow the appeal.

A.

How Gotskill Works

[4]

On appeal, neither party took issue with the application judges
    description of how the game functions and is played. I simply adopt his
    description, which is as follows:

A. How GotSkill Works

(i) Introduction

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 games 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.



(ii) The Potential Next Win and the Amusement Phase

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.

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.

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

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 players hand-eye coordination. Once the game is complete, the players
    actual win is the product of the percentage value and the amount wagered.

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

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

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.

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
    players 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.

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 [or] any
    after that.

C. Possible Outcomes over Multiple Plays

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 applicants 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.

B.

Decision of the Application Judge

[5]

At the outset of his analysis, the application judge set out the
    governing legal principles that the Registrar recognizes are correct.

[6]

First, drawing on the Supreme
    Court of Canadas decisions in
R. v. Riesberry
,

2015 SCC 65,
    [2015] 3 S.C.R. 1167,
and
R.
    v. Ross
, [1968] S.C.R. 786,
the application judge stated the principle for
    determining when a game is a game of mixed chance and skill under s. 197:

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

[7]

The application judge explained that the unpredictables contemplated
    in this principle were matters outside the game itself. He gave the example of
    a gust of wind affecting the outcome of a tennis game. The systematic resort to
    chance to determine outcomes must be part of the game itself. For example,
    card games such as poker, where the outcome depends on the initial deal and the
    cards a player happens to draw, have a built-in systematic resort to chance.

[8]

Citing
Ross
, the application judge further explained:

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
. [Citations omitted.]

[9]

Second, the application judge stated the principle that [i]n
    determining whether there is an element of chance, it is the perspective of the
    player that must be considered. He cited
R. v. Topechka
, [1960]
    S.C.R. 898, for this principle, and heavily relied on this case for his
    ultimate conclusion described below. He applied a line of authority rooted in
the dissent of Harvey C.J. in
R. v. Stubbs
(1915), 24 C.C.C. 303 (Alta. S.C.), adopted by this court
    in
R. v. OMeara
(1915), 25 C.C.C. 16 (Ont. C.A.); see also
R.
    v. Gerasse
(1916), 26 C.C.C. 246 (Man. K.B.).

[10]

Stubbs
and
OMeara

concerned a type of gum dispenser machine. The user would
    insert a coin, pull a lever, and then receive a prize, such as gum or tokens
    that could be used to purchase items at the store in which the dispenser was
    located. The user would know what prize the machine would dispense at the time
    they inserted the coin, but would not know the prize available for the next
    round of play. In his dissent in
Stubbs
,

Harvey C.J. pointed out:

As it is, with the privilege of operating the machine more than
    once, the operators 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.

[11]

The application judge analogized
    that [t]he 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. He explained:

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  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. [Citations omitted.]

[12]

The application judge went on to conclude
    that the game was not one of mixed chance and skill under the
Criminal
    Code
.

[13]

First, the application judge noted
    the fact that some elements of the game are out of the players control does
    not necessarily make GotSkill a game of mixed chance and skill, citing
R.
    v. Balance Group International Trading Inc.
(2002), 162 C.C.C. (3d) 126 (Ont. C.A.).

[14]

Second, the application judge
    found there was one significant difference between GotSkill and the gum
    dispenser machines at issue in
Stubbs

and
OMeara
. He explained, [t]he 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.

[15]

The
    application judge reasoned that GotSkill was different:

[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
.

[16]

This
    reasoning led the application judge to issue a declaration
that GotSkill was not a game of mixed chance and skill
.

C.

Analysis

[17]

The chain of the application
    judges reasoning is correct until the last link.

[18]

The application judge correctly
    found that 
[t]here must be a systematic
    resort to chance to determine outcomes, not merely the unpredictables that
    may occasionally defeat skill, and he succinctly explained that such
    unpredictables were those external to the game itself.

[19]

The application judge also
    correctly concluded that in determining whether there is an element of chance,
    it is the perspective of the player that must be considered, and this meant
    that GotSkill had to be considered from the perspective of the player who plays
multiple times (the ordinary person likely to
    play it:
Balance Group International Trading Inc.
, at para. 1)
. It is worth noting the evidence in this case was that
    players in Ontario play approximately 25-30 minutes, and on average use $16 of
    credits (not including any credits awarded for successful completion of the
    skill task) when they first try the game.

[20]

This conclusion disposes of the argument
    Play for Fun repeatedly stressed in its submissions: namely, that a player knowing
    the potential prize in the particular instance of the game could decide to play
    or not play, and that the focus should be on each round or instance of
    GotSkill gameplay. The argument has no relevance to a typical player of the
    game, who plays multiple times and does not know the potential win of the next
    game. In any event, a persons decision not to play a game does not change the
    games character.

[21]

The application judge went on to correctly
    state the principle on which this appeal turns. He said, 
[a]ny 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

(emphasis added)
.
He cited
Ross
for this principle.

[22]

The accused in
Ross
were officers of a bridge and social club. The issue before
    the Supreme Court was whether the game of contract bridge was a game of mixed
    chance and skill per s. 168(1)(f) of the
Criminal Code
, S.C. 1953-54, c. 51, such that the accused, who
    charged players fees that exceeded the statutory maximum, were keeping a common
    gaming house.
[1]

[23]

Writing for the majority, Pigeon
    J. observed that the cards in the hands of each of the four players in bridge are
    determined by chance, but afterwards the outcome of the game depends in
    substantial measure upon the skill of the players in bidding and in playing
    their hands. He noted that the expert evidence was that the element of skill significantly
    outweighed the element of chance. In this context, Pigeon J. rejected the
    argument that mixed games in which skill is a dominant element were games of
    pure skill for the purpose of the
Criminal Code
. Pigeon J. said that to do so would deprive of any
    effect the words or mixed chance and skill and would be contrary to
    Parliaments clearly expressed intention. It was clear, he said, that
    Parliament intended to avoid the uncertainties involved in determining what is
    the dominant element and deliberately chose to include in the definition of game
    all mixed games as well as games of chance.

[24]

The question, then, is not whether
    skill predominates over chance or chance predominates over skill. The question
    is whether the game is one of mixed chance and skill: any degree of chance that
    is part of the game, will suffice.

[25]

The application judge lost sight
    of this principle when he found there was a significant difference between GotSkill
    and the gum dispenser machines because [t]he player of the gum dispenser
    machines was
completely
at the mercy of the machine (emphasis added). He
    lost sight of his earlier comment that 
as long as there is any element of chance, the game will meet the
    definition in the
Code

. And, in determining whether there is a systematic
    resort to chance to determine outcomes, it is essential to consider the normal
    course of play of an ordinary player of the game.

[26]

The application judge recognized that
    chance was present in GotSkill. For example, he observed the player chooses to
    spend their money for the opportunity of being able to obtain something of
    greater value the next time. Whether or not [they have] that opportunity
    depends on chance. And he said [t]he 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. These findings should have led the application
    judge to conclude that there is a systematic resort to chance in GotSkill and
    it is a game of mixed chance and skill.

[27]

It is worth observing that the
    application record included a technical review of the game by Gaming
    Laboratories International. The review stated, [t]aken as a whole,
a
    random element of game play does exist
when considering
    multiple games being played, as determined by the ordering of tickets within
    the finite pool.

[28]

The application judge further
    erred in his use of
Topechka
and
Balance Group International Trading Inc.
Neither case applies the dominant element" test or displaces
Ross
as the controlling authority. In concluding GotSkill is not a game of mixed
    chance and skill because a very skilled player can beat the machine, the
    application judge erred by applying the dominant element test rejected in
Ross
.

[29]

As the application judge
    recognized at the outset of his reasons, if there is
a
    systematic resort to chance, then chance is an element of the game. If skill
    is also
an
element, it does not matter which is
    dominant
:
the game is one of mixed chance and skill.
As there is a systematic resort to chance
    in GotSkill
when it is played
    multiple times
, GotSkill is therefore a
    game of mixed chance and skill.

[30]

Finally, I add that the
    application judges finding that very skilled players could beat the machine if
    they played long enough is true only in a carefully defined and highly
    improbable circumstance. The application judge should have based his assessment
    on how GotSkill is intended to be played by the ordinary person:
Balance
    Group International Trading Inc.
, at para.
    1.

[31]

The application judges finding is
    based on the notion that
if a
    player played all 1,000 tickets in a file and scored 110 percent on the skill task
    every time, they would win more than they wagered. However, a number of
    circumstances make such an occurrence unlikely. The player would not know when
    the run of 1,000 tickets begins, because some tickets would have been played by
    a previous player. The player would not know that if they changed themes, a new
    ticket in a new file in a new pool would be played, restarting the necessary
    run of 1,000 tickets. The player would also not know a run of 1,000 tickets is
    necessary, but even if they did, they would still not know when to stop playing,
    as they have no way of knowing what ticket in the file is being played at any
    time. It would thus be a highly improbable happenstance that a player would begin
    with the first ticket in a file, play 1,000 games without changing themes, score
    110 percent consistently, and then stop playing.

D.

Conclusion

[32]

The appeal is allowed. A
    declaration shall issue that GotSkill is a game of mixed chance and skill for
    the purpose of s. 197(1) of the
Criminal Code
.

[33]

The parties may make written
    submissions regarding costs, no longer than five pages, within 14 days of the
    release of this decision.

Released: BWM AUG 8 2019

R.G. Juriansz J.A.

I agree. K. van
    Rensburg J.A.

I agree. B.W. Miller
    J.A.





[1]

Some of the players taking part in the games exchanged money,
    although this does not appear to have played a role in the courts determination
    of whether the game of bridge was a game of mixed chance and skill.


