Starting a Gaming and Betting Business In Nigeria- What you Need to Know

Nigeria has over the years experienced a rise in the gaming and betting industry which has further developed with the increase of mobile and internet penetration coupled with the availability of payment platforms provided by Fintech Companies.

The first step to starting a gaming and betting business in Nigeria is to register the company with the Corporate Affairs Commission (CAC) with a share capital of 30 million for sports lotteries while non-sport lotteries are 5 million and thereafter obtain a license from The National Lottery Commission. The license is valid for a period of 10 years except if it is revoked or suspended. To operate in Lagos State, the company must also obtain a license from the Lagos State Lottery Board.

Who regulates Gaming and Betting in Nigeria?

The agencies that regulate gaming and betting activities in Nigeria are the National Lottery Regulatory Commission (NLRC), Lagos State Lotteries Board (LSLB) and Other State Lotteries Boards Nigeria.

What is the key legislation regulating Gaming and Betting in Nigeria?

Gaming and betting in Nigeria are regulated by the National Lottery Act 2005, National Lottery Regulations 2007(as amended), Lagos State Lotteries Law 2004 (applicable only in Lagos State) among various lotteries laws in other states.

What are the Classes of Licence Granted by the National Lottery Regulatory Commission (NLRC)?

The classes of license granted by the National Lottery Regulatory Commission include –

1. Lottery Licence
2. Sports betting license
3. Promotional lottery: SMS/ USSD, Interactive Scheme, Scratch Cards, and Web-Based, and as may be defined by the NLRC from time to time.

What is the Cost of Obtaining Gaming and Betting Licenses?

Payment for the license is made to the NLRC and the government-approved application fees for all categories are:

Lottery Licence: N2,000,000.00

Sports Betting Permit: N2,000,000.00

Permits: categorized by the NLRC as SMS/ USSD, Interactive Scheme, Scratch Cards and Web-Based, Consumer Sales Promo, etc. (application fee for this is subject to document review)

Approval Process and requirements for Gaming and Betting License

The approval process comprises three (3) phases: The application stage, the approval in principle phase, and the application for the final license phase. The breakdown of the three phases is as follows:

1. The applicant must submit a letter of application with a completed application form, comprehensive proposal, and application fee to NLRC.
2. Applicants must submit duly Completed forms (signed by a Director and Company Secretary) and supporting documents to the Commission.
3. Upon receipt of the application, NLRC will review the application within 21 business days; where necessary, the applicant may be asked to provide additional information/ documentation which may extend the review period.
4. The applicant will be notified of the status (approved or rejected) of the application at the end of the review period. Successful applications will proceed to the licensing process.
5. The board will invite approved applicants to make a presentation to NLRC on the proposed gaming scheme.
6. Inspection: NLRC delegates will inspect the facilities- server centre, providers, head office, and model outlets– of the prospective operator to ensure compliance with approved standards.
7. The Lottery Licence or Sports Betting Permit Approval in the principal period shall be 90 days from the day of issuance.
8. The applicant must fulfill all approval conditions within the stipulated period.
9. During the Approval in principle period, the NLRC may require the applicant to submit additional documents in support of the proposed operation, fulfill inspection requirements and pay the statutory fee(s) in full.
10. Successful applicants must execute the Terms & Conditions of operation as part of the approval process.
11. Contact details of applicants who successfully complete the process will be uploaded on the Commission’s website.

What is the procedure for Obtaining a Sports Betting License from Lagos State Lotteries Board?

The Lagos State Lotteries Board (LSLB or the Board) is a state regulatory agency responsible for issuing Online Sports Betting (OSB) licenses in Lagos. The procedure for obtaining the OSB license in Lagos is straightforward and less complicated than that of the NLRC. However, both have similar requirements.

Companies intending to operate a licensed betting scheme in Lagos must be incorporated in Nigeria with a minimum share capital of ₦20,000,000 (twenty million Naira). Prospective sports betting licensees are to submit their application to the Board, attaching a letter of intent and the following documents:

1. Evidence of payment of non-refundable application fee of ₦500,000 (five hundred thousand Naira)
2. Incorporation documents of the prospective licensee
3. A detailed proposal on the online sports betting scheme containing particulars of the names and profile of Directors, business plan, model and organisational structure, market analysis, and financial projection of the company, amongst other things.

The board will review the application upon submission and payment of the application fee of ₦500,000.00 within ten (10) to fifteen (15) working days. Subsequently, the board will invite applicants to make a presentation on the proposed gaming scheme. Successful candidates would be granted an Approval-in-Principle (AIP) subject to the fulfillment of certain conditions and payment of the ₦50,000,000 (fifty million Naira) license fee. The AIP is a 90-day temporary license granted to the applicant pending the grant of a final permit, subject to the applicant’s fulfillment of all the conditions outlined in the AIP. The license is granted for a period of 5 years in the first instance, renewable every five years at the discretion of the Board at a fee of ₦10,000,000.00.

Regulatory Compliances in the Gaming and Betting Sector

Licensees are required after commencing operations, to remit 3% tax on monthly sales turnover, one percent (1%) to the NLRC and (2%) to the 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, licensees are expected to submit an annual report to the NLRC not later than 30^th June every year and ensure its account is audited within 6 months after the end of each year by external auditors.

Licenses are also expected to employ modern technologies and approaches to provide efficient services to players, adhere to government policies and corporate governance principles,s 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.

It is important that NLRC is notified of any changes in business structure, details, and proposed operations of applicants during the renewal of license period as misrepresentation or supply of false information to the Commission is a ground for revoking a license/permit

Gaming operators are not allowed to modify, alter, or amend the particulars/modalities of an approved lottery scheme or promotional lottery without prior approval of NLRC. Political office holders in Nigeria are restricted from having a financial interest in a lottery license.

Conclusion

The overlap in regulatory functions at the Federal and State levels is a major challenge facing the industry. Also, despite the impressive turnover in the sports betting segment of the economy, the complexities and costs associated with acquiring a sports betting license may deter new entrants, especially foreign investors. However, it is hoped that the government would look into these areas as part of its mandate to ensure ease of doing business in Nigeria. Starting a sports business in Nigeria and need assistance with regulatory compliance? We are always ready to assist. Contact us here today