The Nigeria Lottery and Sport Betting Industry in recent times has experienced a stratospheric boom given the ease brought about by technological advancement- increased access to digital telephones, successful internet penetration and increased access to internet-enabled devices- which greatly influenced participation of individuals who could freely place financial wager on outcome of sporting events ranging from the final conclusion of a game to the events in the game.
Generally, online sport betting is a fast-growing business with an estimated annual growth rate of 12%, according to Global Betting and Gaming Consultants (2011), and this is driven by globalization and technology. In the United States, asides from the states of Nevada who have had Sports betting Laws enacted since 1949, all other states have recently introduced laws to enable sports betting for the first time save for three( Idaho, Wisconsin, and Utah). Countries like the UK, Canada, Kenya, Ghana, South Africa, etc. also have laws regulating sports betting and it is entirely legal in these countries.
Some form of betting in Nigeria however can be illegal, chapter 22 of the Nigerian Criminal Code Act sets out legal and illegal forms of gaming. The illegal games are roulette, dice games except for backgammon, non-skill-based card games, and any other games of chance which are not favorable to the player while racing, sports betting business, or land-based casinos are permissible. In Nigeria, gaming activities (e.g. lotteries, sports betting, etc.) are regulated at the federal and state levels, despite conflicting arguments as to the constitutionality of the Federal Government’s involvement in regulating gaming activities.
Although some states in Nigeria like Lagos State have created state laws (Lagos State Lottery Laws 2004) governing sport betting activities within the state, the National Lottery Regulatory Commission (“NLRC”) established through the National Lottery Act, (“NLA”) 2005 regulates the operation of the lottery business and gaming activities in the Federation. The NLRC is responsible for issuing licenses and permits, setting standards and guidelines/rules, and promoting transparency and integrity in the operation of a lottery/gaming business nationwide. The NLA is supplemented by the National Lottery Regulation 2007.The NLRC grants 3 different classes of licenses:
Lottery License
Sports Betting License
Promotional License
Pursuant to the NLRC’s guidelines, applications to the Commission must be accompanied by the payment of a non-refundable application fee of ₦2,000,000 (two million Naira) and necessary documents and operational information including:
1. A completed NLRC application form;
2. An application letter stating the applicant’s intention to operate a sports betting scheme;
3. Memorandum and Articles of Association, certificate of incorporation and other relevant incorporation documents;
4. Evidence of updated annual returns filed at the Corporate Affairs Commission (CAC);
5. Evidence of domain name registration with a country code top level domain label (ccTLD) for Nigeria;
6. Evidence of trademark registration;
7. Evidence of registration with the Special Control Unit on Money Laundering;
8. Particulars, profile and relevant qualification(s) of directors and key personnel.
9. Proposed organizational structure, operational flow and 5-year financial projection for the betting scheme.
The proposal submitted to the NLRC should contain details of the planned game events, proposed distribution channels, operations, marketing and distribution strategy, betting modalities, terms, and conditions of participation for bettors, and sports betting industry analysis. The NLRC also requests for the profile and details of technical service providers, partners, telecoms providers and suppliers, contact persons for service providers, a copy of the proposed JVAs or SLAs with providers and suppliers, and the Software Certification from approved and recognized testing labs.
At the end of this application stage, the successful applicants will be required to make a presentation to the NLRC, to justify the grant of license. Usually, the application is reviewed in 10 – 21 working days.
Provisional Approval Stage
Once the application is reviewed, approved applicants are granted a temporary license, valid for 90 days, subject to the fulfilment of certain pre-approval requirements including:
Payment of permit fees within 30-days of receipt of notification;
Bank guarantee of at least N25,000,000, valid for no less than one year;
Connection of betting platform to the NLRC’s monitoring and reporting framework to ensure compliance with the approved standards;
For companies with foreign ownership/participation, proper immigration documents, Certificate of Capital Importation and other investment documents from the Nigerian Investment Promotions Commission (NIPC);
Execution of Terms & Conditions of Operation of Sports Betting Schemes; and
Copies of duly executed service level agreement with third-party providers.
These conditions are all inclusive and failure to fulfil these requirements within the 90-day period may void such application for the sports betting permit. Applicants and prospective licensees are advised to ensure that they are prepared to meet these conditions prior to grant of the approval in principle, to meet the 90-day period allowed. The issuance of the preliminary approval comes after the payment of the license fees.
At the expiration of the provisional approval period, a substantive permit will be issued by the NLRC, and the details of successful applicants uploaded on the NLRC’s website.
Post-Licensing Stage
After commencing operations, licensees are required to remit 3% tax on monthly sales turnover, one percent (1%) to the NLRC and (2%) to National Lottery Trust Fund respectively, on or before the tenth (10th) day of the following month. Sports Betting Operators are also mandated to submit monthly updates on or before the 10th day of the next month. As part of its regulatory mandate to maintain transparency, propriety and quality assurance in the lottery business, the Commission will also conduct a quarterly operations audit. It is not clear if the commission will audit its internal affairs or those of the licensees. The NLRC must be notified of changes in business structure, details, and proposed operations of applicants during the application review/license period.
The National Lottery Regulation 2007 administers the post-licensing reporting and compliance obligations of Licenced operators. Licences granted by the Commission are valid for ten (10) years from the date of issue. The holder is expected to establish a “Prize Fund” account which will hold a minimum of 50% (fifty percent) of the proceeds realized from any national lottery, exclusively for the payment of prizes.
Operators are expected to employ modern technologies and approaches to provide efficient services to players, adhere to government policies and corporate governance principle and keep proper accounts and records of its transactions. A license holder is generally required to ensure it monitors and reports suspicion of irregularities and fraud to the NLRC. It is also required to ensure that its agents, franchise operators and representatives operate in compliance with the terms of its license.
Persons under the age of 18 (eighteen) are barred from being directors in a sports betting company, participating in any lottery event and receiving winnings from same. It is worth mentioning that prospective applicants should note that the grant and renewal of the license is at the discretion of the President of the Commission, based on the Commission’s recommendation.
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