Apparently it actually went to court (an unlicenced game of chance) about 25 years ago and that case set an upper bound on how complex the question had to be to be acceptable. Nobody really wants the winner to fail the test, so it often doesn't even meet that low standard, especially for small prizes.
Is the "no purchase necessary" boilerplate also unique to Canada? There's usually some way (inconvenient and with some small cost such as postage) to enter without purchasing anything from the company involved so you can't really call it a lottery.
Yes, as ordinary income, not capital gains (about the most unfavo(u)rable tax treatment). Which seems unfair since the tickets or whatever are not deductible generally, but I suppose the pols consider such "windfall" money fair game.
Thanks for the question-- I had not thought about this-- had a strange idea that it might have been legislation resulting from a mentally deficient individual wot won a large prize rather than just typical legal chicanery.
Best regards, Spehro Pefhany