Canada has rules regarding "gambling," into which category fall many contests of this nature.
When World of Warcraft does their yearly Giant Arena Tournement of Whatever, people in America pay twenty bucks to gain access to a special server. Some American states have laws that outlaw internet gambling, which somehow this falls under, seeing as how an individual pays money to enter a competition and there is a monetary payoff for the winners (in wowcraft's case, first prize is like $5grand or something), and thus, Wowcraft-playing individuals in those states cannot enter the Tournament*. Canadian participants do not pay the money to enter, rather, they submit an essay on some topic or other, I didn't look since it didn't apply to me.
Seeing as how the payoff for AE's Jeans contest is a quantity of items of presumably great monetary value, whatever the Canadian laws are are kicking in and hence the odd-sounding rule in the contest.
* - this was only problematic to some of my guildies because they wanted the in-game pet that Blizzard offers to all accounts who participate in the qualifiers for the Tournament; thus Blizzard makes an ass-ton of money off of this because some people really will pay twenty bucks and subject themselves to eight hours or more of PVP just so they can have a little murloc with a helmet and a spear. In my defense, it /is/ a really really cute murloc X D. But many people were sad that they couldn't even try, due to their states' laws.