The gaming and lottery industry is a major revenue contributor in the economy and, if properly regulated and harnessed, could be a potential source of significant revenue for the government. According to statistics, over 60 million Nigerians have been actively involved in sports betting, and 53 percent of Nigerians engage in betting at least once a day. Also, about 2 billion dollars is spent on sports betting daily in Nigeria1 . Reports also indicate that on the average, Nigerians spend approximately $5.5 million on sports betting every single day with average wagers amounting to around $8.2 The advent of online sports betting has also made betting more easily accessible to millions of people.

There are several grey areas on the regulation and taxation of gaming business in Nigeria. Generally, it is expected that in a developing economy like Nigeria, the gaming and lottery industry should be heavily taxed to discourage such activities, especially among low-income earners. Curiously, this is currently not the case in the country. Gaming and lottery companies are exempted from the provisions of CITA and the Value Added Tax (VAT) Act, and are merely subject to lottery tax at 7% of net proceeds. Notably, the Finance Bill 2022, still awaiting presidential assent, seeks to change the above narrative, by subjecting gaming and lottery companies to tax under CITA. This article highlights the current tax position, the proposed changes by the Finance Bill and other relevant fiscal provisions.

Regulatory provisions on gaming and lottery business in Nigeria

a. Regulatory Oversight

There is a measure of overlap between the Federal and State Governments in the regulation of gaming and lottery business in Nigeria. At the Federal level, the National Lottery Act, 2007 (as amended) established the National Lottery Regulatory Commission (NLRC), which regulates lottery and gaming activities in Nigeria. At the State level, some States have also passed laws to regulate the industry, such as the Lagos State Lotteries and Gaming Authority Law 2021, which establishes the Lagos State Lotteries and Gaming Authority. The seeming impasse between the Federal and State regulatory authorities has been decided upon by the Federal High Court in Association of Nigerian Bookmakers v NLRC & 5 Ors3 and the Court of Appeal in Nigeria Employers Consultative Association & Anor v. A.G., Federation & Ors. 4 In both cases, the Courts held that gaming and lottery business are under the exclusive list of the Constitution, therefore the Federal Government and the National Assembly are the authorities duly empowered to regulate gaming and lottery business to the exclusion of the State Government/States House of Assembly.

b. Licensing

By virtue of the above decision of the Court of Appeal in Nigeria Employers Consultative Association & Anor v. A.G Federation & Ors, the NLRC is the competent authority to regulate lottery business in Nigeria. The NLRC, established by the National Lottery Act 2005 (as amended 2007), regulates gaming and lottery business generally in Nigeria. The Lagos State Lotteries and Gaming Authority also seeks to regulate gaming activities in Lagos state. The NLRC issues licences, such as lottery permits, sports betting licences, promotional permits SMS/USSD, among others. The licensing approval process is divided into the application stage, the pre-approval stage, and the post-approval stage. The Lottery Licence is valid for 10 years, the sports betting license for 5 years; and the mobile lottery/gaming scheme (including USSD and SMS) for 1 year.

c. Online Betting

In recent years, there has been an increase in the use of electronic channels for gaming and lottery. This has made it easier for individuals to participate in gaming and lottery from the comfort of their homes or any other location. It has also presented an opportunity for non-resident companies to enter into the Nigerian gaming and lottery market. Gaming companies have also partnered with telecommunication operators to ensure that players can access sports betting using USSD codes. The regulatory powers of NLRC applies equally to online gaming, sports betting, and the mobile lottery/gaming scheme.

Although it is quite convenient and easily accessible, online betting, however, carries a risk of data breach, cyber attack or possible exposure of private information of users, such as cardholder data, login details, bank account details, betting history and other personal information. This, therefore imposes a huge responsibility on operators of online betting and gaming to ensure that the online platform is safe, secure and free from breach or other interference from hackers.

Fiscal and tax provisions

These are:

i. Lottery Companies Income Tax

ii. Other Relevant Fiscal Provisions

Lottery Companies Income Tax

i. Currently, companies engaged in lottery and gaming business enjoy a special tax treatment. The National Lottery Amendment Act (NLRA) imposes lottery companies' income tax (lottery tax) on companies engaged in lottery and gaming business. This tax is computed at the rate of 7 percent on the net proceeds of the licensee in each assessment year. The NLRA further provides that where a company has been assessed for lottery tax in any year, it shall be exempt from the provisions of CITA and the VAT Act. With the above amendment by the NLRA, gaming and lottery companies have a significantly reduced tax rate compared to companies in other sectors of the economy that are subject to corporate tax at 30% of their profits.

ii. Other Relevant Fiscal Provisions

The Corporate Affairs Commission (CAC) Operations checklist specifies a minimum share capital requirement of N5 million for lottery business and N30 million for sports lottery business. However, the National Lottery Regulatory Commission prescribes a minimum share capital of N100 million, with N50 million of it paid up for lottery licences; N30 million for sports betting permit.

There is no share capital requirement for mobile lottery/gaming scheme (including USSD and SMS). Also, an application fee of N2 million and licensing fee of N100 million is payable by an applicant for lottery license, or sports permit and N5 million permit fee for mobile lottery/gaming scheme.

There are additional fees applicable to holders of a sports permit or mobile lottery/gaming scheme (MLS) permit, such as 3% monthly gross proceeds payable to National Lottery Trust Fund (NLTF) and 2% monthly gross proceeds payable to the NLRC for applicants for MLS permit; 1% gross monthly sales turnover payable to the NLRC; and 2% to the NLTF and bank guarantee of at least N25 million with a minimum validity period of 1 year for Sports Betting Permit (SBP) holders.5

Impact of the Finance Bill 2022

The Finance Bill 2022 seeks to subject lottery and gaming companies to tax under CITA. The bill provides as follows:

"(2) Notwithstanding anything to the contrary in any other law, the taxation of lottery and gaming businesses shall, in addition to the general provisions of this Section, be as follows:

(a) The gaming revenue of a company derived from a gaming or lottery business shall be taxed in accordance with the provisions of this Act. Provided that any non- gaming income earned by a company undertaking lottery and gaming business shall remain taxable under the provisions of this Act.

The effect of this is that once the Finance Bill becomes operational, gaming and lottery companies will have an equal tax status as other companies generally operating in the country and will be subject to CIT at 30%. However, the amount paid as winnings, agency commission, expenses incurred are allowable deductions. In addition, non-gaming income earned by gaming companies are also taxable under CITA.

Curiously, the Finance Bill 2022 is silent on whether or not the VAT exemptions for gaming companies will remain. The implication of this is that if the Finance Bill is signed by the President, as is, gaming companies will continue to enjoy exemption from VAT. However, it is also arguable that the VAT exemptions will no longer apply because the exemption is predicated on the fact that the Gaming company has been assessed to Lottery tax for the year. Where, therefore, the Gaming company was not assessed to Lottery tax, the exemptions cannot apply. We expect that the FIRS will provide further guidance and clarification on this.

Comparative analysis of other jurisdictions


According to the Kenya Revenue authority, revenue from gaming or lottery is taxed at 15%. Winnings from gaming or lottery are, however, subject to withholding tax at the rate of 20%(

South Africa

Gaming and lottery companies in South Africa are subject to regular corporate tax at 28% (27% from Years of Assessment ending on 31st March 2023) and VAT at the rate of 15%.6 The government has also proposed to impose an additional gambling levy but this is yet to take effect.

United Kingdom

Casinos and other gambling operators in the UK are assessed to gaming duty at 15%-50% of their gross gaming yields from gambling, at a rate increasing progressively depending on the amount of revenue; general betting duty of 10-15% on net stake receipts; and pool betting duty at 15% of net pool betting receipts. The gaming duty only applies to premises-based gaming. Remote gaming is taxed separately at a rate of 21%. The gaming duty also does not apply to small scale gaming, private gaming or non-commercial gaming.7


The gaming industry in Nigeria remains a thriving sector with new entrants coming in, mostly through online betting platforms.

Gaming companies will continue to enjoy the exemption from CIT and VAT pending the coming into effect of the Finance Bill. The changes introduced by the Finance Bill are laudable and, if properly implemented, will contribute significantly to the revenue drive of the government. Both the UK, South Africa and Kenya impose significant tax on gaming and lottery business. It is noteworthy that in Nigeria, critical sectors of the economy, such as manufacturing and pharmaceutical sectors, are still subject to tax at 30%. It is, therefore, quite difficult to find a justification for the tax concessions granted to gaming and lottery companies.

In the light of the dwindling oil revenue, and the post-covid economic downturn, we can only expect that the government will maximise all available options to increase tax revenue, as the Finance Bill seeks to do with the new tax regime for gaming and lottery companies.


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3 (FHC/L/CS/1599/2020)

4 ((2021) LPELR-54042 (CA)).

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The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.