The gaming industry in Nigeria is one with enormous potential for revenue generation. However, the prospect of realizing this potential is seriously hindered by the lopsided policies of regulation and taxation in the industry. This study attempts to critically examine the current state of the industry by reviewing the regulatory framework for gaming in Nigeria as well as highlighting the applicable taxes in that industry and juxtaposing with what obtains in advanced jurisdictions.
The methodology adopted by the writers is employed with the aim of identifying challenges and proffering recommendations that if implemented will go a long way in achieving progress for the industry, thus boosting the revenue generating capacity of both gaming operators in the industry and the taxman.
Globally, the gaming industry is a multi-billion-dollar industry which is heavily regulated and constantly growing. Buoyed by recent technological advancements as well as internet penetration across the globe, gaming has emerged as one of the most lucrative industries in the entertainment sector and industry revenue is expected to rise in the coming years as the global economy improves and consumers increase their spending habits.
This multi-billion dollar industry is projected to reach USD 511 billion by 2019. In the United States, the industry reportedly makes a total contribution of around USD 137.5 billion to the US economy annually and directly employs more than 730, 000 people.
In the United Kingdom, the gambling industry was reported to have a total number of 106, 236 employees working in the industry as at March 2017 with a total gross gambling yield of £13.8 billion.
Elsewhere in South Africa, the gaming industry’s current valuation stands at R27 billion while the total number of taxes/levies collected in the 2017 financial year amounted to R 2, 743, 112, 930. It is estimated that the industry will grow at a compounded rate of more than 5% to reach nearly R35 billion.
Over the last few years, there have been substantial changes in the gaming industry from both structural and regulatory perspectives. These changes have led to many jurisdictions regulating or reforming regulations dealing with gaming activities as it is simply too important to ignore for governments who seek to continuously generate revenue for the treasury.Gaming has been labelled as a source of “unresented taxation”, by means of which governments regulate access to gaming products by forcing the gaming providers to operate under a license and taxing the activities. This approach has proven to be very lucrative for many countries especially in times of financial crisis.
- The concept of gaming and gaming laws.
The word ‘gaming’ is one that is fraught with many definitions/interpretations. However, the one we are concerned with in this essay is that which relates to the activity popularly known as gambling.
Gaming which is interchangeably used with the words gambling, betting or lottery has been defined thus:
The act or practice of playing games for stakes or wagers; gambling; the playing at any game of hazard. An agreement between two or more persons to play together at a game of chance for a stake or wager which is to become the property of the winner, and to which all contribute.
It has also been defined by the Black’s Law Dictionary to mean;
The act of risking something of value, especially money, for a chance to win a prize.
The practice of gaming or gambling is normally frowned at owing to socio-cultural and religious perceptions of the activity as a vice but an incisive analysis of the concept of gaming will show that gaming activities like lotteries have in fact been used for good causes. In fact, lotteries which happen to be a segment of gaming, were used in the past as an alternative to taxation and even world renowned institutions like Harvard University used lotteries to fund building projects. The 2012 London Olympic and Paralympic Games were partly funded by lottery revenue.
Within our Nigerian regulatory framework, the term ‘gaming’ is one that lacks a specific definition, whether judicial or statutory. The word however appears to have been captured within the provisions of section 57 of the National Lottery Act 2007 and other statutes. An in-depth analysis of that section will be undertaken in this piece.
It is imperative at this point to state that unless where a contrary meaning is indicated, references in this study to the word ‘gaming’ should be interpreted to mean gambling, lottery and other related activities.
Gaming law on the other hand refers to the body of laws that apply to the gaming (gambling) industry. Gaming law encompasses a collection of several areas of laws like criminal law, constitutional law, contract law and tax law. Gaming laws and regulations worldwide are enormously complex as they usually comprise of various tiers of legislations that require constant reform to keep up with the dynamic nature of the gaming industry.
- Gaming Industry in Nigeria.
It is a trite principle in economics that certain factors affect the demand of goods and services. One of such factors is consumer preference which sometimes can be influenced by religious and socio-cultural perceptions as is the case in Nigeria. The demand for gaming goods and services in Nigeria is low as a result of the prevalent religious and socio-cultural norms prohibiting gambling. In fact, the attitude of public policy towards it has always been negative and prohibitive. This received judicial recognition in Edet v. Chagoon where the Court of Appeal per Owoade JCA held thus:
…, the law legalizes Pool Betting and Gaming; any public policy or rule of morality that is against it must in the circumstance give way to the dictates of the law. This is simply because the domains of law and morals are not coextensive.
Gaming in Nigeria is regulated both at the Federal and State levels by a plethora of laws. It is important to state that In Nigeria, the term gaming is subsumed under the term known as lottery. Therefore, references in this study to the word “gaming” should be interpreted and understood to mean lottery and other related activities and/or terms.
The business of gaming in Nigeria comprises of several aspects or segments. They are: Sports betting (which has both online and offline versions), casino gambling. Pools betting, gaming machines, scratch cards and interactive games, promotional competitions run by companies like banks and telecommunication companies, public and private lotteries.
Sports Betting as a Case Study
The rationale behind delving into the sports betting segment is to illustrate just how lucrative the gaming industry in Nigeria is. Sports betting, which happens to be the gaming industry’s most lucrative segment, involves predicting and betting on the outcome of sport activities and events. Until 2005, Sports betting was illegal in Nigeria and as a result, gaming customers had to rely on offshore online gaming operators.
The business of sports betting in Nigeria has witnessed significant expansion since 2007 when the first sports betting operators first appeared in Nigeria. In 2014 it was estimated that about sixty million Nigerians were betting approximately two billion Naira a day.
Sports betting in Nigeria is now a lucrative venture, it is estimated that about three hundred and eight billion naira (N308, 000, 000) is spent daily on betting. The proliferation of betting operators in Nigeria attests to this fact coupled with the willingness of foreign players to penetrate the Nigerian market. Betting operators are reported to regularly rake in big winnings from bets placed by punters. The business model adopted by these betting operators is very effective.
Almost always, the betting operators combine a mix of online and offline business models in running the betting platform. The default business model deployed by these betting operators involves setting up shop in a central working office while seeking to establish a wide network of affiliate agents who have outposts/shops where customers can go to place bets. The offline model on the other hand happens to be more sophisticated as it involves setting up websites in order to enable punters open personal accounts from which they conduct transactions ranging from depositing funds into an online wallet and placing bets to their bank accounts. This no doubts a highlights the structured working of the sports betting industry,
A leading report in Africa published in 2010 by KPMG revealed mouth-watering numbers made by some leading players in the sports betting sector in Nigeria. In 2016, Bet9ja, the leading betting operator made an average monthly turnover of $2 million USD while the second placed industry player, NairaBet, made an average monthly turnover of three to five million dollars. Comparatively, the South African Market is said to generate the biggest turnover and according to PricewaterhouseCoopers Limited, the South African, Kenyan and Nigerian markets are estimated to be worth a combined monetary value of thirty seven billion dollars in 2018.
- Legal Framework regulating the Gaming Industry in Nigeria
Nigeria’s gaming industry has a plethora of legislations regulating the activities in the industry. These legislations range from general to sector-specific enactments dealing with gaming and other related activities. For the purpose of this study, we shall consider majorly sector-specific legislations which operate at both the Federal and State levels.
The gaming industry at the federal level is regulated by the National Lottery Act of 2005. This is the principal statute applicable to the gaming industry. However, a careful examination of the regulatory background of the gaming industry will reveal that the National Lottery Act of 2005 is not the only applicable law. Indeed, gaming happens to also be regulated by the Criminal Code Act as well as the Gaming Machines (Prohibition) Act.
Criminal Code Act
The Criminal Code Act is a general legislation regulating gaming activities in Nigeria. Gaming is criminalized under the Criminal Code Act. Section 236(2) defines unlawful gaming thus;
…’unlawful gaming’ includes roulette, every game of dice except backgammon, every game of cards which is not a game of skill, the game known as chacha and other games of cowries, and any game the chances of which are not alike, favourable to all the players including the banker or other person or persons by whom the game is managed or against whom the players stake, play or bet.
Section 236(4) and (5) further stipulates the punishment for keeping a common gaming house and being found in one. Also, it would appear that the draftsman in attempting to avoid any ambiguities that may arise in relation to gaming, went as far as criminalizing the operation of betting houses as can be revealed from a thorough reading of section 239 of the Criminal Code Act.
A cursory reading of the provisions of sections 240A and 240C will reveal the criminalized nature of the act of gaming as denoted by the wordings of those provisions.
Gaming Machines (Prohibition) Act
The Gaming Machines (Prohibition) Act, a sector-specific legislation, was enacted in 1977 with the intention to ban the importation, ownership and operation of gaming machines in Nigeria. Section 1 of the Act declared the importation into Nigeria of gaming machines, the ownership and operation thereof as unlawful.
The Act apart from deeming all licenses existing prior to the commencement of the Act as having expired, in Section 1(1) (a) also made it an offence to operate or cause to be operated any gaming machine in any part of Nigeria with the offender being liable upon conviction to a term of imprisonment without the option of fine.
National Lottery Act of 2005
Currently, the principal statute regulating the gaming industry in Nigeria is the National Lottery Act of 2005. It is somewhat interesting to note that the National Lottery Act of 2005 does not specifically define what gaming is but rather gives a comprehensive definition of the term “lottery” and in so doing covers what is known as “gaming”. The Act defines lottery thus;
“Lottery” or “lotteries” includes any game, scheme, arrangement, system, plan, promotional competition or device for the distribution of prizes by lot or chance, or as a result of the exercise of skill and chance or based on the outcome of sporting events, or any other game, scheme, arrangement, system, plan, competition or device, which the President may by notice in the Gazette declare to be lottery and which shall he operated according to a license;
A clear analysis of the above given definition will reveal that concepts such as gaming, casino, sports betting et al is well captured in the language of that statutory provision thus falling within the purview of the National Lottery Act of 2005. The significance of this is that, gaming is legal in Nigeria and as a consequence subject to taxation in Nigeria.
As a condition precedent to operating a lottery business, a lottery operator is required to obtain a license granted by the President of the Federal Republic of Nigeria upon an application made through the National Regulatory Commission. The Commission is empowered to determine the fee payable for the grant of a license and the fee is subject to review from time to time. 
Gaming laws exist at the state level as much as they do at the Federal level. This is because gaming (lottery) does not feature on the exclusive legislative list and as a consequence, both the Federal Government and the State Governments have the power to legislate on gaming (lottery). However, this position seems to have been curtailed by the decision of the Federal High Court in the case of National Lottery Regulatory Commission v. A.G. Lagos State. In that case, the Court had to decide on whether a license granted under the National Lottery Act to engage in National or Inter State Lottery business in Nigeria did not entitle the licensee to freely carry on its trade between states and in particular from and into Lagos State without the need to obtain a license under the Lagos State Lotteries Law, 2004. The Court in resolving this issue held that National Lottery being an Interstate Commerce, any grantee of a license under the Act is free to carry on its trade between states and in particular from and into Lagos State without liability to obtain approval or license from the Lagos State Government.
The import of that decision is that National Lottery is an interstate trade and commerce and by virtue of the fact that the National Assembly has exclusive authority to legislate on Interstate Trade and Commerce pursuant to paragraph 62(a) of the Second Schedule of the Constitution of the Federal Republic of Nigeria 1999, any grantee of a national license is free to carry on its trade between states without the requirement of obtaining another approval or license from State Government.
It should however be pointed out that as laudable as the decision of the Federal High Court is, there is also a contrasting decision in the earlier Court of Appeal Case of Edet v. Chagoon. The brief facts of the case are as follows;
The appellant/plaintiff had invested in Nos. 24, 26 and 35 on the Respondents’/Defendants coupon paper N0316952 of 20/03/04 in the week 34 match of 20/03/04 and won the sum of N600, 000.00. The Respondents’/Defendants refused to pay the Appellant/Plaintiff’s alleged winnings and being aggrieved at the action of the Respondents/Defendants, the Appellant instituted an action at the High Court of Justice, Cross River State, Calabar Judicial Division. After the parties had filed and exchanged pleadings, the respondents filed a motion on notice praying the court to dismiss the appellant’s suit under Order 24 Rules 2, 3 and 4 of the High Court (Civil Procedure) Rules of Cross River State and under the Inherent jurisdiction of the court. In a considered ruling delivered by Ita J., the court granted the application and struck out the suit. Aggrieved by the said ruling, the appellant appealed to the Court of Appeal. The Court of Appeal in allowing the appeal, held thus;
Pool betting and casino gaming do not appear in either Part I (Exclusive legislative list) or Part II (Concurrent Legislative list) of the Second Schedule to the 1999 Constitution. Not being an item in the Exclusive Legislative List or in the Concurrent Legislative List and not matters incidental or supplementary to the execution of any powers in the Exclusive Legislative or even the Concurrent Legislative List, pools betting and casino games are residual matters, they are within the legislative competence of the House of Assembly…
It would appear that, given the doctrine of stare decisis, the Court of Appeal decision in Edet’s case which is binding on lower courts is good authority for the position that State Governments are empowered to legislate on gaming.
Perhaps relying on the reasoning of the Court of Appeal in Edet’s case, states have continued to enact and enforce laws relating to gaming or the gaming industry. This has thrown up a clash for regulatory supremacy as there exists a dichotomy between National and State Licenses. The National Lottery Regulatory Commission asserts that holders of a national license have the authority to carry on their lottery business nationwide and has even gone a step further in asserting its supremacy by issuing a public notice declaring that the Commission oversees all lottery activities in Nigeria and also mandating Companies conducting sports betting activities to regularize their operations with the Commission. The State Governments on the other hand continuously legislate on gaming issues and even collect taxes. This dichotomy has generated controversy and is still a subject of dispute in the Courts.
Due to the multiplicity of laws available and constraints imposed, we shall consider only Lagos State and the applicable laws therein i.e. the Lagos State (Amendment) Lotteries Law 2008.
Lagos State (Amendment) Lotteries Law 2008
The gaming industry in Lagos State is regulated by the Lagos State Lotteries Board (hereinafter referred to as the Board) which is primarily tasked with the regulation of all gaming activities to wit; Public online lottery, online sports betting, promotional competitions, scratch card & interactive games, gaming machines, pools betting, etc. The Board was established under section 1(1) of the Lagos State (Amendment) Lotteries Law 2008 and was entrusted with certain functions as provided for in section 9 of the extant law.
To carry on gaming business in Lagos State, one must possess a license. The application procedure for the license is dependent on the aspect of gaming the applicant is interested in. However, there are generic requirements for obtaining a license which include;
- Application letter specifying the aspect of gaming.
- Non-refundable application fee.
- Documentary evidence of business incorporation
A detailed business plan/proposal on the proposed lottery scheme providing the following;
- Information about business structure, ownership and management of the applicant.
- Details of proposed lottery operation
- Financial information/structure, investment and projections.
This writer would like to state that the position of the law on gaming is very much in line with global best practices. One commendable aspect of the regulatory framework for gaming in Lagos is the requirement of incorporation under the Companies and Allied Matters Act as condition precedent for obtaining a license. This is a feature lacking in National Lottery Act 2005 and subsidiary legislations made thereunder.
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 LL. B(Hons); B.L; ICSAN (In View); firstname.lastname@example.org
https://www.statista.com/study/13717/gambling-statista-dossier/ accessed on the 25th day of March 2018.
 http://www.gamblingcommission.gov.uk/PDF/survey-data/Gambling-industry-statistics.pdf accessed on the 25th day of March 2018.
 http://www.ngb.org.za/SiteResources/documents/2017/Stats/Stats%20FY17%20Qrt%201-4%20audited.pdf accessed on the 25th day of March 2018.
 B.A. Garner (Ed. In chief), Black’s Law Dictionary, (7th Ed) (USA; West Publishing Co. 2009) p.687.
NB Lotteries were used to finance the establishment of the English colonies in America. See further https://govinfo.library.unt.edu/ngisc/research/lotteries.html
 Some other jurisdictions maintain the term ‘gambling’.
 Gaming activities generally include lotteries, casino gambling, sports betting, etc.
 (2008) 2 NWLR (Part 1070) pg 85 at pg 108.
NB the Commission is statutorily required to regulate promotions that fall outside schemes for creating customer preference and loyalty. Once a customer pays money to enter a promotion that ends up in a random draw; Then such a situation is considered a lottery and is regulated by the Commission
 National Lottery Regulatory Commission classifies lotteries into the following divisions; charitable lottery, lottery concierge services, online lotteries, promotional lotteries, short-messaging service (SMS) lotteries, USSD lotteries and other lotteries. www.natlotregcom.gov.ng/index/pages/page/&nav=258 accessed on the 15th of March, 2018.
 Some of the general legislations’ include; Criminal Code Act, Companies and Allied Matters Act, National Office of Technology Acquisition and Promotion (NOTAP) Act, Companies Income Tax Act, etc.
 Sections 236 – 241 Criminal Code Act makes provisions for offences in relation to gaming houses, lotteries, etc.
 The general purpose and scope of the Gaming Machines (Prohibition) Act can be deduced from the long title of the Act.
 Section 1(2) Gaming Machines (Prohibition) Act.
 See section 57 of the National Lottery Act of 2005.
 See sections 17 and 18 of the National Lottery Commission Act of 2005. It is submitted that the licensee can be an individual, business name or body corporate, as the wording of section 19(1) is not exclusionary. This draws support from the wording of Regulation 9(1) of the National Regulations 2007. See further the details of the licensees published on the National Lottery Regulatory Commission’s website as provided below. http://www.natlotregcom.gov.ng/index/pages/page/licensees/?&nav=269
 Regulations 9(2) and 10(3) National Lottery Regulations 2007 http://www.natlotregcom.gov.ng/downloads/NLR_2007.pdf
 Unreported suit no FHC/L/CS/1258/2012
 Per. A.M. Liman (supra)
 (2008) 2 NWLR (Pt. 1070) 85
 Per Ngwuta JCA (As he then was ), Page 103 (Supra)
 Note that the Lagos State Casino and Gaming Law 2007 as well as the Casino and Gaming Regulations 2008 are other relevant sector-specific legislations in Lagos State.
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