Sports betting laws in Nigeria

1.      INTRODUCTION

Largest country in Africa by population, Nigeria with a GDP of approximately 1.118 trillion, has the largest economy on the continent. The industries which drive the country’s economy and account for the bulk of its annual GDP are its petroleum, tourism, agriculture, and mining industries. Interestingly, apart from these industries, a new industry has emerged in Nigerian to be a highly profit making industry i.e. the betting industry. The Nigerian sports betting and gaming industry has grown astronomically in the last two years. This exceptional growth can be attributed to the large population of the nation and increased access to digital telephones, successful internet penetration and increased access to internet-enabled devices [which includes, telephones, ipads and other portable devices]

An important aspect that has contributed to the rise in gaming industry has been the broadening of the customer base to include the young middle-class Nigerians, repealing the stereotype that the industry only succeeded in attracting the lower income earners. This trend has been supported by improved mobile penetration- Data from Nigerian Communications Commission (NCC), shows that mobile penetration increased from 36% to ~50% in the last three years, accorded to increased awareness through aggressive expansion and marketing by operators as well as technological improvements in payment platforms. To some extent, the need for additional income in the face of the recent economic recession which has left a number of youths unemployed and underemployed has provided a boost to the base of gaming users – in particular, sports betting and lotteries. According to a 2015 publication on Football betting in Nigeria, most bets are placed in bet shops while an increasing number of customers are placing bets online. In addition, Business Monitor International (BMI) research forecasts 182 million mobile subscribers in 2021, from the current 153 million. The expectation is that as the number of internet subscribers increase, so will the number of gaming users. In 2016, the gambling industry made a total gross profit of 450 billion US dollars which was higher than Nigeria's GDP in the same period. In summary, gambling is a big deal worldwide, and betting makes a significant chunk of it. Consequently, owing to the increase in the demand of sports betting globally and more specifically in the African continent, different countries have drafted regulatory laws to regulate, promote and to earn revenue from this highly lucrative industry.

  

2.      Nigerian Legislations

In Nigeria, on an average people spend 3000 Naira (USD 9) on betting every day and when this number is multiplied by the number of people actively participating in sports betting i.e. 60 million Nigerian locals; the total money spent by 60 million people on sports betting every day becomes roughly around USD 600 million. Interestingly, even with this huge market of sports betting in Nigeria, laws and regulations governing betting is still not very clear. There are two federal acts that make reference to gambling in terms of what is illegal or not allowed, and what is legal and allowed.

A.    The Gaming Machines (Prohibition) Act of 1977

This act of 1977 was enacted with an objective of putting restrictions on the use of gaming machine in Nigeria by making it illegal to own and play on gaming machines. Further, the act specifies that illegal ownership and use of gaming machines in Nigeria will lead to imposition of penalty if caught and a prison time of a year in prison without the option of a fine. In addition, all such gaming machines along with proceeds of the operations will be forfeited to the Federal Government. It is pertinent to note that a gaming machine is defined as a mechanical gaming or gambling device operated by any person with a view of obtaining monetary reward upon insertion of a coin or token.

B.     The Nigerian Criminal Code Act, 1990

This act refers and addresses gambling in chapter 22, whereby it is determines the legality of sports betting, racing, lotteries, pools and certain “skill based” land casino games such as Roulette, Black Jack, and video slots and progressive slots machine, however, “non-skilled based” games are not allowed. It is to be noted that it is illegal for anyone in Nigeria to offer unlawful or illegal games or gambling activities at any unlicensed venue or property. Further, Section 236 sub-section 1 of the act of 1990 defines a gaming house as any property where unlawful gaming is carried out and penalises anyone who owns, occupies, manages or permits the use of said property as guilty and liable to a fine of a 1000 Naira (USD 3) or imprisonment for two years, or both.  

The act envisages only three lawful types of gambling in Nigeria

a.       betting / pools,

b.      lotteries

c.       land casinos.

Here is a brief description and explanation of each:

a.      Betting and Pools

As per the Subsection 3 of Section 239 in Chapter 22 of the Nigerian Criminal Code Act, 1990

“any house, room or place which is used for the purposes of a licensed pool betting business shall not be deemed to be a common betting house by reason only that it is so used.”

This clause allows the operation and use of betting and pool houses in Nigeria provided they are the only types of gambling on offer. Further, under the laws of Nigeria, betting and pool operators must use a totalisator (a.k.a. a pari-mutuel machine) to register bets and equally divide the total amount bet amongst the winners.

In addition, operators are required to register their pools and/or betting houses with the government in order to gain a legal status. Failing to do so would mean that they are operated illegally and open them up to prosecution, fines and/or time in prison.

b.      Lotteries

As per section 240 in Chapter 22 of the Nigerian Criminal Code Act, “lottery” includes any game, method or device whereby money or money's worth is distributed or allotted in any manner based on or to be determined by chance or lot.

A lottery ticket includes any ticket, paper or other printed article that entitles the holder who has the winning numbers to collect its corresponding cash prize or equivalent.

A "public lottery" means a lottery to which the public or any class of the public has, or may have, access, and every lottery shall, until the contrary is proved, be deemed to be a public lottery.

According to Section 240, anyone caught acting like a ‘middle-man’ between a public lottery and buyers of lottery tickets players is liable for a 100 Naira fine or six months in prison.

c.       Land Casinos

Although equipped with a smaller selection of games than you’d find in most western land casinos, casino’s in Nigeria has enough to keep local and visiting gambling fans entertained.

Most have a small selection of table games (such as Blackjack, Casino Hold’em and American Roulette) accompanied by a bank of slot machines, which can be coinless.

Even though Nigeria’s various Acts expressly prohibit the import and use of certain casino games – such as slot machines, for instance – the nation’s three licensed land casinos seem to be permitted to offer them.

Online Betting

It is pertinent note that online gambling is not legal in Nigeria, and anyone or any organisation caught hosting and/or operating an internet-based gambling site within Nigerian borders may be liable for prosecution and thus fines and/or a prison sentence.

That said, it’s extremely hard if not impossible for the Nigerian government to prevent its citizens from accessing and signing up with Nigerian-friendly online casinos and any other off-shore owned and run internet gaming sites that welcome players from Nigeria.

While it’s true that relatively few online casinos allow players from Nigeria to sign up, deposit and play, there are a few that do, the best of which you’ll find reviewed and featured here on this site. Some casinos even allow players from Nigeria to deposit, play and cash-out in Naira.

To play online, all you need is a fast and secure internet connection, a late model computer or smart mobile phone or device, the means to fund your real money online casino account, and a trustworthy, safe and reputable online casino to sign up with.

HOW TO OBTAIN A GAMING LICENSE& CURRENT REGULATION:

The Criminal Code Act establishes most gaming law in Nigeria, with the relevant sections being most recently updated in 2004. Obtaining a gaming license in Nigeria requires approval from several operators. The main operators are the Nigerian Investment Promotion Commission (NIPC), Special Control Unit against Money Laundering (SCUML), and the National Office for Technology Acquisition and Promotion (NOTAP). Some operators are also required to secure a Capital Importation Certificate, and liaise with the Federal Inland Revenue Service (FIRS) to get a Tax Identification Number and register for Value Added Tax (VAT). Operators should ensure they comply with the laws with regards to which games they offer. Only games that comply with Section 57 of the Nigerian National Lottery Act can be offered legally, which include lotteries, sports betting / pools and bricks and mortar casinos. On the state level, the Lagos State Lotteries Board (LSLB) has issued over 40 licenses to operators (LSLB, 2017). The board has started to implement measures to strengthen the regulatory framework through increased transparency. These measures include providing and updating their data to include operators whose licenses have been suspended. Other states are also realizing the revenue potential of the gaming industry. One of the biggest problems here is that the government may be missing out on extensive tax revenues because of two issues. As in many nations, the proliferation of overseas sites that do not pay taxes in the country is costly, of course. But there’s also regulatory confusion that may be leading to less taxation than should be taxing place, with the National Lottery Regulatory Commission being uncertain whether it should be collecting from state licensed operators. It has been suggested by researchers that the way in which the entire gaming industry is regulated needs a review and extensive overhaul so that there can be stronger oversight and more consistency across the country. For now there are too many overlaps between state and federal laws and many foreign investors have described the legislation as convoluted. Federal law makes no reference to internet gaming at all! State legislatures should begin developing robust regulatory regimes for legal sports betting that emphasize compliance, market competitiveness, and cooperation among all stakeholders.

ECONOMIC BENEFITS:

The sports betting industry has been able to leverage on Nigeria’s huge football culture. Some of the big leagues, such as the English Premier league, and the Spanish La Liga, have millions of fans in the country - betting provides Nigerians the opportunity to earn from what they love. Betting houses can now be spotted in almost every street in Lagos, new ones are propping up daily, with subscribers in store and online daily. In addition, Business Monitor International (BMI) research forecasts 182 million mobile subscribers in 2021, from the current 153 million. The expectation is that as the number of internet subscribers increase, so will the number of gaming users. According to a recent investigation, roughly “60 million Nigerians between the ages of 18 and 40 are involved in active sports betting. On average, these punters spend around 3,000 Naira (about $15) every day on bets”. Accordingly, almost 2 billion naira is spent on sports betting daily in Nigeria, which is nearly 730 billion Naira a year! If the industry can be taxed effectively, it could mean a new and large source of income for the national coffers, helping to further develop this increasingly powerful player on the regional and world stages. We would hope this has a knock on effect for the sport of football in Nigeria [we hope]. It is noteworthy that the recent foreign exchange crisis resulting in the weakening of the Nigerian naira has placed a severe strain on businesses in Nigeria. The software and hardware solutions for gaming, used by operators are typically sourced from foreign providers and as such, operators tend to pay more than previously negotiated due to fluctuations in the currency.

Challenges affecting the Nigerian gaming industry

a.      Regulation

The overlap in the regulatory function between the Federal and state levels is a major challenge facing the industry in Nigeria. As such, an overhaul of the regulatory environment is required to enhance oversight and improve inconsistency in enforcement of license generations and payment of levies, development and revenue generation. At the state level, the necessary regulatory framework will need to be set up to properly regulate and govern the gaming industry for effective transparency of betting operations.

b.      Taxation

There are a wide range of approaches taken by regulators and fiscal authorities across the globe to taxing gaming activities of operators. One major area of focus is the determination of what constitutes taxable profit (i.e. the tax base) and the applicable tax rate. In Nigeria, the interpretation of what constitutes net gaming revenue or the tax base remains unclear and largely inconsistent. This inadvertently has a direct impact on the applicability of taxes such as value added tax (VAT) and withholding tax (WHT) (charged by the Federal and State authorities) on winnings, payments made to foreign partners, etc. Global trends has shown that sports betting if clearly regulated, is a major sector for the generation of tax revenue by the government. This has however not been the case in Nigeria as the industry remains largely unregulated despite the existence of several Acts. As such, the issue of multiple taxation and licensing continues to plague local operators.

c.       Cyber – Security

Providing a safe and secure gaming environment to players is vital to the continuous success of the Nigerian gaming industry. Security of online games/plays is a growing concern especially with the increasing use of electronic channels for gaming. Online Lottery and Sports Betting operators’ process high volume of players’ transactions and it is critical that these operators ensure that they keep players personal data secure and protected from cyberattacks. Cyber criminals may compromise a platform by installing malicious software (malware) to gather information about players from within their account. This information could include cardholder data, login details, bank account details, betting history and other personal information. Also, a denial of service (DoS) attack could be carried out which could disrupt the performance of the gaming platform or even make it unavailable, leading to customer dissatisfaction, service downtime and loss of gaming revenue

d.      Foreign exchange issues

The recent foreign exchange crisis resulting in the weakening of the Nigerian naira has placed a severe strain on businesses in Nigeria. The software and hardware solutions for gaming, used by operators are mostly sourced from foreign providers and as such, operators tend to pay more than previously negotiated due to fluctuations in the currency.

e.       Negative impact of gaming

Game of chance in Nigeria generally thrives through word-of mouth advertising and most punters in the country get involved in gaming through information from close relatives, peers and colleagues who have won high returns with little stakes placed on bets. With the nature of the sport and the passion and energy generated, there is always a sense of addiction associated with this activity, and addiction is the primal force behind the stigma generally associated with gaming in Nigeria. With the thriving opportunity, the expansion in the gaming industry is deterred by strict religious beliefs in the country against the game of chance.

f.       Ineffective management structures and poor corporate governance

Some operators within the gaming industry lack inadequate structures to support the model of the business. A number of the companies that make up the gaming space evolved from the old pool culture, and these businesses were managed with limited financial knowledge depending on the clientele base. Thus, significant losses arise as a result of failure in determining the odds accurately, expansion strategy, tax planning etc. Without good management structures or clearly defined strategies for the business, operators struggle to fulfil obligations, expand and attract foreign direct investment at the right price.