The old lottery and gaming industry has continued to develop with various innovations worldwide. With an estimated twenty-six percent of the world’s total population involved in gambling, and it is estimated that around two billion dollars are spent on sports betting daily in Nigeria,one the industry remains a viable source of tax revenue for governments. The regulation and taxation of the industry in Nigeria has not been without question as to who should regulate, what should be taxed and how the taxes should be applied. The Finance Bill 2022 (“the Finance Bill”) currently awaiting presidential assent, introduces amendments to the Corporate Income Tax Act, among other tax laws. Significantly, it modifies section 15 of the Corporate Income Tax Law (CITA) to include the taxation of lottery and gambling companies. While this amendment helps clarify the tax status of the industry, it is important that it juxtaposes with the existing financial obligations of industry players in terms of license fees and other legal payments.

Regulatory oversight of lotteries and gaming

The Federal Government, through the National Lottery Regulatory Commission (NLRC), regulates the lottery and gaming under the National Lottery Act 2005 and the National Lottery Regulations 2007 (as amended). At the state level, some states also pass laws to regulate the industry, such as the Lagos State Lottery and Gaming Authority Act 2021. The question of who should regulate has persisted in the industry for some time and has given lead to legal action with a view to establishing whether the federal government, state governments, or both have regulatory powers. By a 2022 decision of the Lagos-based Federal High Court,2 it was held that lotteries fell under the exclusive list of the Constitution and gave the Federal Government the status of sole regulator over the gambling business to the exclusion of the states. This position aligns with the previous decision of the Court of Appeal in Nigerian Employers’ Consultative Association and Anor v. AG, Federation and Ors,3 where it was held that the National Assembly could legislate on lotteries and gambling in accordance with the provisions of Articles 62 and 67 of Part 1 of the Second Schedule of the 1999 Constitution. Importantly, the court interpreted cross-border trade and interstate and commerce connoted in the Second Schedule of the Constitution as broad enough to empower the National Assembly to exclusively enact national lottery and gaming legislation. Additionally, the virtual nature of most lottery and gaming activities makes them interstate. It should be noted that the Court of Appeals through a previous decision4he had argued that pool gambling and casino games are residual matters. The Law of Taxes and Fees,5 relegates bets, lotteries and games of chance to the tax jurisdiction of the states. However, this Law has been the subject of litigation and has been declared invalid both in the higher courts and in the courts of appeal. Pending a decision of the Supreme Court reversing the decision of the Court of Appeals in Nigerian Employers’ Consultative Association and Anor v. AG, Federation and Ors,6 industry players must obtain the necessary permits and licenses from the NLRC.

The NLRC issues licenses such as lottery permits, sports betting licenses, SMS/USSD promotional permits, among others. The license approval process is divided into the application stage, the pre-approval stage, and the post-approval stage. Licensing requirements include submission of application letters, completed forms, comprehensive proposals, supporting documents, evidence of payment of prescribed fees, inspection of company technical and operational facilities by NLRC officials , connection to the NLRC monitoring and reporting platform, website posting materials in hard and electronic copies, trademark logo photo frames, enforcement of the terms and conditions of operation of a sports betting business and a due diligence visit to the technical provider, among other requirements. The NLRC outlines the schedule for meeting license requirements and issues permits to successful applicants. Sports betting permits are issued for five years renewable for another full term, while lottery permits are issued for a ten-year term.

Tax Obligations of Lottery and Gambling Businesses

An important aspect of industry regulation is the statutory fee hurdle that companies must cross. Legal fees, whether tagged license fees or levies, are in effect taxes on the company’s income. Companies wishing to engage in the lottery and gambling business have a legal minimum share capital. For sports betting and gaming companies, the minimum issued share capital is N30,000,000 (thirty million naira). At the application stage, the prescribed fee is N2,000,000 (two million Naira) payable to the NLRC. At the pre-approval stage, an additional payment of a license fee is required in the amount of N50,000,000 (Fifty Million Naira) for sports betting licenses and N100,000,000 (One Hundred Million Naira) for lottery licences. In addition, applicants are required to provide a bank guarantee from a reputable commercial bank to cover the sum of N25,000,000 (twenty-five million naira). At the start of operations, licensed businesses must remit 2% of their monthly turnover to the National Lottery Trust Fund and 1% to the NLRC. In cases where operators use short code services to provide betting services, 2% and 3% of the gross monthly sales volume is remitted to the NLRC and the National Lottery Trust Fund, respectively, upon maturity .7 While corporate income taxes now specifically provided for by the Finance Law could be considered sui generis, a holistic review of industry regulation reveals that its players are currently subject to multiple legal payments and remittances.

By the provisions of the Finance Bill, business activities such as games of chance, betting, video poker, roulette, crops, bingo, slot machines and slot machines are considered gambling, while betting, gambling, gambling, scheme, arrangement, system, plan, promotional contest or other device, real or virtual, for the distribution of prizes by lottery or chance. Importantly, the bill provides for the president to further expand the scope of the bulletin lotteries. In arriving at taxable profits, gaming and lottery companies will be granted allowable deductions that include amounts paid as winnings, prizes, or similar payments from the applicable prize fund or contributions to the Lottery Trust Fund; agent commission expenses incurred; taxes and levies paid to relevant government and regulatory authorities; and other allowable deductions applicable to businesses taxable under CITA.

While the proposed section makes lottery and gaming proceeds chargeable under the CITA, the justification for the provision submitted by the House Finance Committee specifically states that existing oversight and regulatory functions at the federal and state levels remain in effect. This indicates that the question of whether state governments can regulate and by extension tax the lottery and gambling is still unresolved. It also remains to be seen whether the inclusion of existing taxes and levies as allowable deductions under the Finance Bill will cure the incidence of multiple taxes in the industry.


The lottery and gaming business continues to thrive as a lucrative industry both locally and globally. The courts have ruled establishing the federal government through the NLRC as the sole regulator of the industry in Nigeria. This is expected to provide clarity for industry players on who to turn to for licenses and where to pay taxes. While lottery and gaming are very profitable, participation in the industry can be daunting due to the high legal fees imposed on companies in the sector. The Finance Bill 2022 introduces a provision in section 15(2) proposed to include lottery and gaming businesses under the CITA application. This clarifies the position on the tax obligations of lottery and gambling companies.


1. Assessed Jan 19, 2023.

2. Nigerian Bookmakers Association v. NLRC and 5 Ors FHC/L/CS/1599/2020

3. (2021) LPELR-54042 (CA)

4. Edet vs. Chagoon [2008] 2 NWLR pt. 1070 page 85

5. Cover T2, LFN 2004

6. (n3)

7. General Guidelines, available at accessed January 17, 2023.

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