May 14, 2019
The Nigerian lottery and gaming industry has seen a lot of growth and expansion in recent years. This is mostly driven by the growing popularity of the sports betting segment fuelled by the huge followership of premiership football and other similar sporting activities. The number of participants in this industry has been on a steady increase and this corresponds with increased level of transactions. It is expected that the industry will continue to grow due to its popularity and acceptance by the Nigerian sports enthusiasts.
The industry has attracted renewed attention from the Federal Inland Revenue Service (FIRS) whose mandate is to collect taxes from all taxable economic activities. With a revenue target of N8trillion for 2019, the FIRS has been quite bullish in its tax collection efforts to ensure it meets this target. The FIRS recently announced its intention to enforce the collection of Value Added Tax (VAT) on lottery and gaming activities. The plan is to automate the process of VAT collection directly from the operators of lottery and gaming machines. This was disclosed at the stakeholder’s meeting recently organised by the FIRS in conjunction with the National Lottery Regulatory Commission (NLRC).
Many stakeholders are concerned about this development as the charge of VAT on stakes (bets) may discourage bettors (people who place bets) from using their services and encourage the use of informal and foreign operators, which will lead to loss of revenue.
Understanding the lottery and gaming industry in Nigeria
The gaming industry in Nigeria comprises of several segments such as; sports betting (which has both online and offline versions), casinos, pool betting, gaming machines, scratch cards and interactive games, promotional competitions run by companies like banks and telecommunication companies, public and private lotteries. The industry is governed by the National Lottery Act 2005 (NLA) and The National Lottery Regulation 2007 (NLR) at the federal level and Lagos State Lotteries Law 2008 (LLL) in Lagos state. Within the Nigerian regulatory framework, the word ‘gaming’ is one that is associated with many judiciary and statutory definitions and perceived to be subsumed under the word “Lottery”.