Africa Market Focus: Nigeria

In the final part of our deep dive into Africa’s emerging gambling hubs, we look at the highly populous, highly cosmopolitan and highly complex legislatory framework of Nigeria.

Nigeria’s economy is a middle-income, mixed economy and emerging market with expanding manufacturing, financial, service, communications, technology and entertainment sectors. It is currently ranked as the 27th largest economy in the world in terms of nominal GDP.

It has the potential to become a powerhouse for the continent over the next quarter century and as the economy grows, so will those sectors, including the gambling market, which is largely dominated by locally based operators.

Nigerian gambling regulation is like many in the African continent, a patchwork of local licensing standards versus national legislation, which can be hard to understand and even harder to explain to those without prior knowledge and expertise concerning the African market. EGR Compliance, in partnership with international law firm Dentons Solicitors, attempts to cut its way through the dense thicket of this potentially very lucrative market.

[box title=”Nigeria in numbers” box_color=”#EC6408″ title_color=”#333333″]

Population: 206 million

GDP per capita: $2,400

Internet penetration: 46.6%

President: Muhammadu Buhari

Principal regulatory body: National Lottery Regulatory Commission (national level)

State level (Lagos): The Lagos State Lotteries Board

[/box] [box title=”Which verticals are legal?” box_color=”#EC6408″ title_color=”#333333″]

First thing to know about the gambling regulation framework in Nigeria is that it is divided into two levels: national and state level (similar to South Africa). In this market focus we have covered the regulations of Lagos state, as it is one of the most populated states in Nigeria.

Both national and state acts do not provide for the specific types of verticals or games that are regulated. Simultaneously, these acts[1] encompass a wide, umbrella-type definition of lottery; virtually speaking, under this definition it is possible to consider practically any game of chance as a “lottery”.

This situation creates a rather unique possibility for the Nigerian authorities to shape the list of verticals and verticals itself in the way they see fit.

That being said, according to the information available on the website of the National Lottery Regulatory Commission (the “NLRC”)[2] and descriptions in the National Lottery Regulation we understand that NLRC issues the following licences and permits:

• lottery licence;
• mobile lottery/gaming[3] licence;
• promotional competition[4] licence;
• sports betting permit.

In turn, according to the website of the Lagos State Lottery Board (the “LSLB”)[5] the following licences are issued on the state level:

• public online lottery;
• promotional competitions and other lotteries^[6];
• online sports betting;
• hotel casino;
• standalone casinos
• scratchcard and interactive game^[1];
• slot machines;
• pool betting;
• other games^[2].

[/box] [box title=”What about online licensing?” box_color=”#EC6408″ title_color=”#333333″]

National level

While the National Lottery Act and other acts do not cover online gambling (probably due to them being untouched since the 00s), the National Lottery Act provides for that the NLRC is entitled to issue “guidelines”. These guidelines are available on the official website of NLRC[1]  and we understand from them that the following types of licences include an online aspect:

• mobile lottery/gaming licence; and
• sports betting permit.

It should be separately noted that these guidelines provide for rather comprehensive requirements to the sports betting operators; for instance, it is required to provide NLRC with the information about profiles of all service providers (web developers, odds providers, virtual providers etc.) that will be involved in the sports betting operations.

State level

In turn, under the Lagos State Lotteries Law, LSLB has the right, akin to NLRC’s one, to issue additional instructions that are obligatory for the gambling industry, but in the case of LSLB these instructions are named “requirements”.

According to these requirements set out by the LSLB, it is not entirely clear which types of licences are available in online mode, but upon our review of the particulars of these requirements it can be concluded that the following types of licences are available online:

• public online lottery;
• online sports betting;
• scratchcard and interactive game^[1].

To sum it up, it can also be concluded that the perimeter of online offerings in Nigeria (both on the national and state level) is rather wide: sports betting, online casinos and other types of remote gambling are available and regulated to some extent.

[1] Scratchcards are a small token, usually made of cardboard, where one or more areas contain concealed prizes; this usually involves matching symbols, pictures, numbers or words. Interactive games are games that involve active interaction with one or more players. The rules and mode of play are determined by the licensee subject to the approval of the Lagos State Lotteries Board.

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Gambling tax

Applicable rates of the gambling tax vary depending on the particular licence, namely:

National licences

• Lottery
  • 20% of net proceeds of the lottery (payable for the first five years after determination of the results of the lottery);
  • 25% of net proceeds of the lottery (payable for the second five years after determination of the results of the lottery);
  • 5% of net proceeds of the lottery for renewal period (if any);
• Mobile lottery/gaming
  • 5% of monthly gross proceeds (payable each month);
• Sports betting
  • 3% gross on monthly sales turnover (payable each month);
• Promotional competitions
  • N/A.

State (Lagos) licences

• Public online lottery
  • N/A
• Promotional competitions and other lotteries
  • N/A
• Online sports betting
  • 5% of sales revenue for month (payable monthly);
• Hotel casino, standalone casino
• €500 per casino machine;
• €30 per slot machine, gaming table;

• Scratchcard and interactive game
  • N/A
• Slot machines
  • €70 per slot machine for one year (payable annually);
• Pool betting
  • €205 per month for fixed odds games (payable each month);
  • €500 per month for fixed odds/treble chance (payable each month).

[/box] [box title=”Who regulates gambling in Nigeria?” box_color=”#EC6408″ title_color=”#333333″]

National level: National Lottery Regulatory Commission

State level (Lagos): The Lagos State Lotteries Board

Alias: NLRC for national level and LSLB for state level

Website: NLRC (https:/www.nlrc-gov.ng/) and LSLB (https://www.lslb.lg.gov.ng/)

[/box] [box title=”How long do licences run for? What are the costs of applying?” box_color=”#EC6408″ title_color=”#333333″]

Term

National licences

• Lottery
  • 10 years;
• Mobile lottery/gaming
  • Maximum – one year
• Sports betting permit
  • Five years:

• Promotional competitions
  • Maximum – one year.

State (Lagos) licences

• Public online lottery
  • Five years;
• Promotional competitions and other lotteries
  • One year;
• Online sports betting
  • One year;
• Hotel casino and standalone casino
  • One year;
• Scratchcard and interactive game
  • One year;
• Slot machines
  • One year;
• Pool betting,
  • One year.

Licence fee

National licences

Lottery

• Application fee (one-off payment): €4,500
• Licence fee (one-off payment): €200,000

Mobile lottery/gaming

• Application fee (one-off payment): €4,500
• Permit fee (payable annually): €11,000

Sports betting permit

• Application fee (one-off payment): €4,500
• Licence fee (one-off payment): €100,000

Promotional competitions

• to be determined by the NLRC.

State (Lagos) licences

Public online lottery

• Application fee (one-off payment): €1,000

Promotional competitions and other lotteries

• Application fee (one-off payment): €100
• Lottery levy: €50 (Frequency of payments is determined by the LSLB)
• Licence fee: €1,000 (Frequency of payments is determined by the LSLB)

Online sports betting

• Application fee (one-off payment): €1,000
• Licence fee (payable annually): €115,000
• Renewal fee (payable annually): €22,000

Hotel casino, standalone casino

• Application fee (one-off payment): €1,000

• Scratchcard and interactive game
  • Application fee (one-off payment): €100
• Slot machines
  • Application fee (one-off payment): €500
  • Licence fee (payable annually): €4,500
  • Renewal fee (payable annually): €2,000
• Pool betting
  • Application fee (one-off payment): €300
  • Licence fee (payable annually): €2,000
  • Renewal fee (payable annually): €1,000

+

Minimum charter capital

National licences

Lottery

• €45,000

Sports betting permit

• €70,000

Mobile lottery/gaming

• N/A

Promotional competitions

• N/A

State (Lagos) licences

Public online lottery

• €45,000

Promotional competitions and other lotteries

• N/A

Online sports betting

• €45,000

Hotel casino, standalone casino

• €45,000

Scratchcard and interactive game

• N/A

Slot machines

• €45,000

Pool betting

€2,000

+

Bank guarantee

National licences

Sports betting permit (this requirement exists only for sports betting vertical on a national level)

€60,000

[/box] [box title=”What restrictions are placed on operator marketing to players?” box_color=”#EC6408″ title_color=”#333333″]

As of now, there are no established list of advertising restrictions applicable to the gambling industry in Nigeria.

Nevertheless, there is a uncommon obligation of the licensees to prepare the so-called “Code of Practice” which covers its advertising materials.

Such a “Code of Practice” should be compliant with all laws of the Nigeria (e.g. the Consumer Protection Council, the Advertising Practitioners Council of Nigeria and Nigerian Communications Commission (NCC) guidelines). Furthermore, such “Code of Practice” should be also compliant with principles of responsible gambling (it should be noted that there are no established principles of RG in the laws of Nigeria hence it is unclear to what extent responsible gambling measures should be taken into account by operators. To add to that, we have noticed that Nigerian operators have responsible gambling sections on its websites as well as clocks and various warnings related to gambling-related harm). On top of this, it is obligatory to obtain approval from the NLRC too for this “Code of Practice”.

It is also notable that there are no advertising restriction on the Lagos level.

As such the“fragmentary” framework of advertising regulations even allowed Google to ease its restrictions for advertising of online gambling in Nigeria.

We also would like to note that Nigerian authorities are going to resolve existing lack of advertising regulations – there is a draft law on the table setting standards for gambling advertising.

[/box] [box title=”What do operators need to be aware of if expanding into the market?” box_color=”#EC6408″ title_color=”#333333″] 

There are several factors that should be considered before entering the market:

Regulation of gambling is split into two levels: national and state. Such split leads to the described above turbulence in regulation between levels as well as in relation with the national regulators and state-level regulators. To add to that existing regulatory framework is rather old and needs updating. However, upon our consultation with the representatives of LSLB, we are of the understanding that all outdated and “scrappy” regulation would be revised in the manner which allows it to create sustainable regulation.

Despite the outdated nature of the regulators framework, regulators are bestowed with the mandate to issue “guidelines” and “requirements” that may seriously affect the requirements to the operators and need to be carefully reviewed and considered; ideally during consultations with the regulators.

According to the national “guidelines”, every joint venture with licensed operators is subject to approval by the regulator – this adds an additional step for foreign investors to enter the market.

[/box] [box title=” Local expert view – What do you think of the market?” box_color=”#EC6408″ title_color=”#333333″]

This market may be described as a mixed bag – on the one side there is a great turbulence in the regulations (and, obviously, in the market itself) caused by its outdated nature and existing conflict between national and state levels of regulations and regulators; in the same time on the other side, Nigeria is huge and past years showed significant growth of internet penetration, which, in turn, has increased the popularity of online offerings and opened up new opportunities for the international operators.

To add to that, it is really great that Nigerian regulators are very responsive (we are certain that everyone involved in the gambling industry met some of regulators’ representatives during gaming events) and keen to follow best international practices; it is also important that they are not only keen to follow them, they have the tools to implement them by way of a rather flexible system of “guidelines”, “requirements” and similar acts.

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Ilya Machavariani is a gambling and gaming lawyer for Europe, Russia and the CIS, heading the Russian and CIS gambling practice group at Dentons. He has extensive experience advising on gambling issues and advises clients on operating in the Russian Federation and the CIS on the full range of regulations relating to the activities of gambling operators, as well as drafting the necessary contracts and internal documents. He also handles licensing processes for gambling operators that are entering new markets throughout the world.

Ivan Kurochkin being an associate at CIS gambling practice group at Dentons has broad experience on gambling issues, especially in regulatory matters. His work involves advising clients doing business in the Russian Federation on various activities of gambling operators (including bookmakers), focusing on issues related to compliance with gaming licence requirements, applicable AML requirements, and issues relating to advertising of gambling operators.

Picture credit:iStock/beyhanyazar

Footnotes

[1] National Lottery Act: “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 device which the president may by notice in the Gazette declare to be lottery and which shall be operated according to a licence.”

Lagos State Lotteries Law: “Lottery includes any game, scheme, arrangement, system, plan or device for distributing prizes by lot or chance and any game, scheme, arrangement, system, plan or device, which the Commissioner may by notice in the Gazette declare to be a lottery.”

[2] https://nlrc-gov.ng/guidelines/

[3] All schemes with the elements of chance offered to the general public.

[4] NLRC website describes promotional competition as “SMS/ USSD, Interactive Scheme, Scratch Cards and Web Based, and as may be defined from time-to-time”; NLRC also clarifies that “Any Company/Corporate entity whose core business operations is not a lottery; but organises a promotional scheme that has an element of chance or lot in the distribution of prize(s) must apply for approval and obtain a promotional lottery permit prior to the launch of such a promotion.”

[5] https://lslb.lg.gov.ng/#

[6] Private lotteries, charitable/society lotteries, promotional competitions.

Disclaimer: please note that this market focus covers Nigeria – this country does not have any centralised database of laws, acts and regulations (contrary to other African countries that we have covered earlier). Owing to this fact, we were in constant contact with the regulators and our connections on the ground in order to bring you the most accurate and precise information. However, we cannot exclude the possibility that there are certain acts or laws or regulations that are not available online and hence we cannot use them as a basis for our conclusions. Owing to this fact and for the benefit of the global igaming community please feel free to reach out to EGR or us if you find some inaccuracies or are able to share some insights about the Nigerian market.