Home to 212.3 million people, the Federal Republic of Nigeria is a country in West Africa that borders Cameroon, Benin, Niger, and Chad. It consists of 36 states plus the Federal Capital Territory where the national capital of Abuja is situated. The history of the country as we know it today started in 1914 after the unification of the British Protectorates of Southern and Northern Nigeria.
Nigeria officially gained independence from Great Britain in October 1960 and experienced a three-year period of civil war, corruption, and social unrest between 1967 and 1970. It was not until the late 1990s that the country succeeded in achieving a steady democracy. It witnessed its first relatively fair and free democratic elections in March 2015 when the Nigerian majority voted in favor of Muhammadu Buhari.
Gambling is perhaps not the first thing that most people think of when they hear about Nigeria. Regardless, the country is home to a promising and rapidly growing industry with legal landbased casino gambling, wagering on sporting events, and lotteries. Nigeria has one of the most competitive gaming markets on the African continent, which many industry analysts attribute to the increasing internet penetration and exposure in the country.
Laws That Govern Gambling in Nigeria
Several pieces of legislation have helped shape the Nigerian gambling market as we know it today, the first one being the 1977 Gaming Machines Prohibition Act. It prohibited the import, operation, and ownership of gambling machines.
Taxes and Licensing Conditions in Nigeria
1 National Lottery Regulation
The 2007 law on National Lottery Regulations describes in great length all requirements licensed lottery operators must comply with. Licensees must provide the local regulator with extensive data on accounting, security, and its systems for internal control. Each licensed operator should strive to develop and maintain a versatile range of games to increase the profits generated by the National Lottery.
Operators must outline the information about their games in detail, including their rules, format, payout structure, and the means of delivering them to the players (i.e. online or offline). The logo of the National Lottery should be clearly visible on all authorized lottery tickets. The same goes for the minimum age requirement for purchasing the tickets.
Article 10 of the National Lottery Regulation Act informs us that licenses normally have a ten-year validity unless the regulators have revoked or suspended them. The maximum duration of a license can reach up to fifteen years.
Renewing the permits is possible on condition the operators submit their renewal applications three months before the licenses expire. The country does not impose restrictions on the maximum number of available permits. Licenses granted by state authorities on a regional level usually have a validity ranging from one to five years and are also subject to renewal.
It is important to mention, the National Lottery Regulatory Commission (NLRC) does not deal with the issuance of casino gaming licenses. By contrast, regional gambling watchdogs offer various licenses including for casino gambling. One example is the state of Lagos where operators can receive permits for online sports wagering, scratchcards, pool wagering, and interactive games.
License application fees also depend on the respective state jurisdiction issuing the permits. The costs for the application may vary from ₦50,000 to ₦2.5 million.
3Tax Rates in Nigeria
Licensed gaming operators must pay taxes on their revenue in jurisdictions with regulated gambling industries. Nigeria is no exception as it taxes authorized gambling businesses based on their gross revenue. The tax rates on a federal level differ based on the type of product on offer. Lottery operators must contribute 20% of their gross gaming revenue (GGR). Additionally, regional taxes are in place but these differ across Nigerian states. Lagos, for example, imposes a 2.5% regional tax on operators’ GGR.
Those who offer legal sports wagering services must pay 1% of their monthly turnover to the Nigerian regulator, while another 2% goes toward the National Lottery Trust Fund. In cases where the operators rely on short-code services to offer their sports betting products, they must pay 2% and 3% of the monthly turnover to the regulator and the Trust Fund, respectively.
In 2019, the Federal Inland Revenue Service (FIRS) unveiled plans to enforce a 5% value-added tax (VAT) for all gambling transactions conducted over the internet. The proposal resulted in massive outrage among Nigerian operators who argued the move might destroy the local industry and drive players away from licensed operators.
Online Gambling in Nigeria
When it comes to online gambling, Nigerian law does not contain any specific regulatory framework for this segment. Despite the absence of concrete written regulations, there are permits for the operation of several forms of online gambling. However, their types vary across Nigeria – some federal states require specific permits, while others use generic licenses that apply to both terrestrial and remote operations.
Licensed lottery operators have the option to offer their products to Nigerians online as long as they meet certain conditions stipulated by the corresponding regulator. For instance, the regulator in Lagos is the local State Lotteries Board, while that in Anambra is the local State Gaming Commission. Online sports betting, fantasy sports, and lotteries are allowed in Nigeria. The National Lottery Regulatory Commission (NLRC) maintains a registry with all approved gaming operators in the country.
Nigeria’s laws do not provide a clear definition of online gambling but the term is generally used in reference to gambling conducted via any electronic channel, be it television, telephone, the internet, mobile applications, or radio communication.
The operators are expected to offer Nigerian players adequate channels for reaching customer support and resolving potential disputes. They must register their software with the Nigerian Office of Technology Acquisition and Protection (NOTAP).
The country lacks technical measures to protect Nigerians from unauthorized remote businesses at the time of publication. Locally licensed operators insist on laws that restrict unlicensed firms from servicing customers based in the country. The NLRC made moves in this direction in September 2020 when it requested cooperation from the Nigerian Financial Intelligence Unit (NFIU) in the battle against illegal remote gaming operators.
Responsible Gambling and AML Policies in Nigeria
The country currently lacks specific responsible gambling policies applicable to licensed operators servicing local players. Broadly speaking, operators must make sure they carry out their gambling operations with fairness and social responsibility in mind. However, there are no specific tools that allow players to manage their gaming activities and keep them in check.
Before gaining access to any betting products, customers must confirm they are not below the legal age of 18 years old. With that said, studies have shown that although many Nigerians perceive gambling as a risky activity, they also see it as a quick way of earning money.
Policies on Gambling Advertising in Nigeria
Similarly to all other aspects of Nigeria’s regulatory framework, gambling advertisements are overseen on both federal and regional level. When marketing their products and services, licensed operators must stick to the guidelines of several federal entities, starting with the Advertising Practitioners Council of Nigeria (APCON).
Gambling companies must additionally consider the guidelines of the Nigeria Broadcasting Commission, the Federal Competition and Consumer Protection Commission, and Nigeria’s Communications Commission. According to the provisions of the 2005 National Lottery Act, each operator must present the gambling regulator (NLRC) with a draft of its code of practice. The NLRC must then approve the draft, which should contain information about the company’s marketing and public relations.
Gambling-related ads must not appear in proximity to schools, universities, or other centers of education. Ads on radio or television should not be broadcast at times when little children can see them (that is during most of the day). The marketing materials should never target vulnerable individuals (i.e. problem gamblers), children, and adolescents. The most common sanctions for breaching the advertising regulations include bans on inappropriate ads, hefty fines, license suspension, or complete revocation. It all depends on the severity of the violators’ contravention.
The growing exposure to mobile devices and the increasing internet penetration proved to be true game-changers for Nigerian gambling mavens. Online sports betting enjoys tremendous popularity among Nigerians, with approximately 60 million of the locals aged 18 to 40 punting actively. The country has legal online lotteries and sportsbooks that operate with authorization from the NLRC.
Nigerian players are welcome at many offshore gambling sites that gladly cater to their every need with versatile gaming libraries and different payment methods. Industry experts believe that the local gambling industry will witness further growth in the future, especially if the authorities enforce more specific regulations for the online segment.
Stricter supervision and clear-cut regulatory requirements could not only attract more Nigerians to online gambling but would also generate additional tax revenue for the country and encourage economic growth.