REGISTRATION OF LOTTERY & SPORTS BETTING BUSINESS IN NIGERIA

INTRODUCTION

Written by Faith Akatiki Joseph

For: Starlion Legal

The National Lottery Act 2005 defines lottery under the interpretation act thus:

“lottery”or”lotteries” includes any game, scheme, arrangement, system, plan, Promotional competition or device for distribution of prizes by lotor chance, or as a result of the exercise of skill and chance or based on the outcome of sporting events, or any other game, scheme, arrangement, system, plan, competition or device, which the President may by notice in the Gazette declare to be lottery and which shall he operated according to a license”.[1]

Generally, lottery is one of the commonest forms of gambling amongst the people of Nigeria, it is a game of luck involving drawing of lot for a prize, the Nigerian Communication Commission defines ‘lottery’ as “a form of gambling which involves the drawing of a lot for a prize.”  The Criminal Code Act in Section 240 explained ‘lottery’ as a game through which money is won based on chance.[2] Sport betting has grown astronomically in recent years, having a tremendous impact on the Nigerian economy, sports betting operators like Bet9ja, NaijaBet, and Nairabet, optimizing the market trend and youthful demographic, have evolved into blue-chip companies, making Nigeria the second largest online gambling market in Africa.[3] Therefore to protect citizens against fraudulent gaming activities, the Nigerian government has come up with regulations and guidelines to regulate Lottery/Lottery businesses in Nigeria and heavily fines people who post illegal gambling activities.

REGULATION OF LOTTERY BUSINESS IN NIGERIA

The Lottery industry in Nigeria Is regulated by the National Lottery Act 2005 as Amended by the National Lottery (Amendment) Act 2017[4] and the National Lottery Regulation 2007[5], however, some States of the Federation have their own Lottery Laws. For instance, the Lagos State Lotteries (Amendment) Law 2008,[6] which regulates lottery business in Lagos State. Whilst the NLA 2005 deals with national license for operation of lottery business, the LSLL 2004 regulates all lottery businesses operating within Lagos State. So, a prospective Lottery company/business seeking to operate in Lagos is required to obtain two licences; one by the Federal Government and the second by the Lagos State Government. However in the recently decided Suit NO: FHC/L/CS/15992020, Between the Nigerian Association of Bookmakers v. The National Lottery Regulation Commission, The National Lottery Trust, Lagos State Government and other State Governments on the issue of multiple regulations in the gaming sector and payment of multiple taxes and licensing fees to states and the Federal Government. The Judge declared that the Federal Government should be the sole regulator of the gaming business in the country as the constitution is clear on the position of lottery in the exclusive list and the National Assembly can legislate on lottery matters.[7]

Chapter 22 of the Nigerian Criminal Code Act (“CCA”)[8] 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. [9]

In Nigeria, lottery or popularly known as lotto is legal but highly monitored and regulated, by the National Lottery Regulatory Commission (NLRC) established by the National Lottery Act 2005, headed by a Director-General appointed by the president subject to the confirmation of the senate. It also has a Governing Board which has overall control of the commission. 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.[10] The National Lottery Trust Fund is also an agency that regulatory lottery in Nigeria, it was established under section 35 of the National Lottery Act 2005 by the Federal Government of Nigeria to facilitate the achievement of national development goals through the promotion of access to lottery funding for good cause projects which are transformational and sustainable, with lasting impact for people and communities.

REGISTRATION AND LICENCING OF LOTTERY BUSINESSES IN NIGERIA

Sec 17 of the Lottery Act provides that the operation of the business of national lottery or any lottery, by whatever name called, shall be subject to a license granted by the President upon recommendation by the Commission and compliance with the provisions of this Act or any regulations made pursuant thereto, while section 18 provides that obtaining license is by way of application made by any person or body corporate to the President through the Commission in the prescribed form and upon the payment of such fees as may be prescribed, from time to time, by the Commission.[11]

Any company or entity wishing to do business in Nigeria must be incorporated with the Corporate Affairs commission in line with the Companies and Allied Matters Act.[12] The requirements are as set out in the Act. The National Lottery (Amendment) Regulations 2007 further stipulated conditions for the registration of a company wishing to undertake lottery business.

PRE-INCORPORATION: For applicants who are yet to incorporate their company, the promoters will apply for approval to incorporate a lottery/ betting/ gaming company in Nigeria. Documents required:

  1. An application letter for approval to register a Company with lottery/ betting/ gaming objectives in Nigeria.
  2. Copy of the Name reservation approval issued by the Corporate Affairs Commission.
  3. Remita Payment in the sum of N10, 000 (Ten Thousand Naira) in favour of the National Lottery Regulatory Commission.[13]

In order to register a lottery company/business the Promoters of the Company must obtain an “Approval in Principle” from the Lottery Commission and file same at the Corporate Affairs Commission alongside;

The minimum share-capital for a lottery business in Nigeria is 100, 000, 000 (One Hundred Million) shares.[14]

A lottery Permit is required to carry on a lottery promo while a lottery Licence is required for lottery business. A Lottery permit last for 12 months while a Lottery licence last for 10 years.[15]

The NLRC by its general guidelines grants 3 different classes of licenses:

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

The application/ licence process for each class of licence differs and the applicant must abide by the requirements relevant to its proposed scheme. The approval process comprises Three (3) phases: The application stage, the Pre-approval phase and Post- Approval phase.[16]

LOTERY LICENCE

A National Lottery licence is granted to applicants who fulfil licencing requirements. The licence has duration of 10years. Applicants must submit a proposal to the National Lottery Regulatory Commission (The Commission) with the following information/documents.

Application/ Pre-Licence

  1. Completed National Lottery Regulatory Commission application form
  2. An application letter stating the intention of the applicant
  3. Non-refundable Application and processing fee of N2,000,000.00 (Two Million Naira Only) payable to the Commission
  4. License Fee N100,000,000.00 (One Hundred Million Naira Only) upon successful completion of all documentary processes along with the following documents;
  5. Certificate of Incorporation; Copy of Memorandum and Article of Association of the lottery Company;
  6. Details of Board of Directors of Company;
  7. Profile of the Lottery Company;
  8. Detailed Rules of the lottery games.
  9. Bank reference
  10. Details of the Company’s human capital base including accounting, administrative and security systems.
  11. Evidence of clearance from relevant regulatory agencies;
  12. Technological evidence to operate the online lottery business;
  13. Evidence of share capital which is a minimum of N 100, 000, 000 (One Hundred Million) shares.
  14. An operational base for the lottery business.[17]

Upon Compliance with the requirement and fulfilling the conditions above licence is granted.

SPORTS BETTING PERMIT/LICENCE

STAGE 1: THE APPLICATION STAGE

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.[18]

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 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.[19]

STAGE 2: PROVISIONAL APPROVAL

Once the application is reviewed, approved applicants are granted a temporary license, valid for 90 days, subject to the fulfillment of certain pre-approval requirements including:

  1. Payment of permit fees within 30-days of receipt of notification;
  2. Bank guarantee of at least N25,000,000, valid for no less than one year;
  3. Connection of betting platform to the NLRC’s monitoring and reporting framework to ensure compliance with the approved standards;
  4. Proper immigration documents, Certificate of Capital Importation and other investment documents from the Nigerian Investment Promotions Commission (NIPC), for companies with foreign ownership/participation;
  5. Execution of Terms & Conditions of Operation of Sports Betting Schemes; and
  6. Copies of duly executed service level agreement with third-party providers.

These conditions are all-inclusive and failure to fulfill these requirements within the 90-day period may void such application for the sports betting permit. 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.

STAGE 3: POST-LICENSING

  1. Permit holders are required to pay 3% Gross on monthly sales turnover to the National Lottery Regulatory Commission(1%) and National Lottery Trust Fund(2%) not later than the 10th day of the succeeding month.
  2. Operators must submit Monthly report in the approved format on or before the 10th day of the succeeding month
  3. The Commission will conduct a system audit on a quarterly basis
  4. The Commission will conduct a quarterly stakeholder’s interactive meeting[20]

The NLRC must be notified of changes in business structure, details, and proposed operations of applicants during the application review/license period. 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. Lastly, prospective applicants should note that the grant and renewal of the license is at the discretion of the President of the Federal Republic of Nigeria, based on the Commission’s recommendation.[21]

PROMOTIONAL LOTTERY (CONSUMER SALES PROMO/CSPS)

Any Company/Corporate entity whose core business operations are 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.

Applicants must submit a detailed modality of promotion to the National Lottery Regulatory Commission (The Commission) with the following:

  1. An application letter stating the intention of the applicant.
  2. Completed National Lottery Regulatory Commission application form
  3. Non-refundable processing fee as determined by the Commission based in relation to the volume of the proposed scheme and payable to the Commission
  4. Incorporation documents: Certificate, MEMART and Application Form 1.1, status report, (or Form CAC2 and Form CAC7) as the case may be.
  5. Details of the administrative office of the applicant
  6. Nature of product/ service being promoted
  7. Details of key personnel in charge of the promotion
  8. Detailed modalities of the promotional lottery including the name of the scheme, the total value of the prize(s) & categories of prizes to be won, mode and criteria of selection, draw process and applicable rules
  9. Duration of promotional lottery and frequency of draws/ selection of winners and proposed draw dates.
  10. Rules and terms & condition of eligibility, qualification and participation in the promotional lottery
  11. Terms & Conditions attached to claiming Prizes, modalities for distribution of Prizes (State, regional, zonal etc) and proposed prize presentation date.

Note:

  • Applicant must conduct the promotional lottery in accord with submitted modalities. Such modalities cannot be varied or altered without the written approval of the Commission.[22]

MOBILE LOTTERY/GAMING

This guideline shall apply to all schemes with the elements of chance offered to the general public using mobile/telecommunication channels. For the purpose of this guideline, mobile/telecommunication channel includes SMS, USSD, Mobile Apps and any other telecoms-enabled channels.

This guideline is applicable to lottery schemes conducted on telecommunications operators, by Lottery Value Added Services, and other third-party content providers offering lottery-related schemes or schemes with elements of chance in distributions/allocation of prizes. Lottery-related schemes include skill-based initiatives, predict & win games, core lottery, and betting. Consumer sales promo and Loyalty based promotions.

Application for a permit must be submitted and a Permit obtained at least 30 working days before the start date of the scheme.

Mobile lottery schemes shall not exceed 12 calendar months from the start date and may be renewed on conditions stipulated by the Commission.[23]

In addition to fulfilling stipulated conditions of the Permit applied for the VAS provider/applicant will submit for the consideration and approval of the Commission:

  1. Details of telecommunication providers, aggregators and other third-party providers involved in the scheme.
  2. Copies of the partnership agreements- Memorandum of Understanding, Service Agreement with telecommunication providers, financial institutions, aggregator, content provider and/or third-party provider executed for the purpose of the scheme.
  3. Applicants must ensure all agreements/MOU/SLA takes cognizance of and complies with the provisions of the National Lottery Act 2005 especially as it relates to prize fund and contribution to the National Lottery Trust Fund. Agreements which do not adequately provide for or reflect relevant provisions of the National Lottery Act and National Lottery Regulation will not be accepted or approved.

GENERAL REQUIREMENTS FOR THE PROPOSED MOBILE LOTTERY/GAMING SCHEME

  1. An application letter stating the intention of the application
  2. Non-refundable application processing fee of N2, 000,000 (Two Million Naira Only) payable to the Commission.
  3. Permit Fee valid for One(1) Year, upon successful completion of all documentary processes.: N5,000,000.00 (Five Million Naira Only)
  4. Nature of product/service being promoted where applicable
  5. Detailed modalities of the mobile lottery including the name of the scheme, duration of scheme, value & categories of prizes to be won.
  6. Terms & Conditions of eligibility, qualification and participation in the lottery scheme
  7. Details of selection/draw process and applicable rules.
  8. Frequency of draws/selection of winners and proposed draw dates.
  9. Terms & Conditions attached to claiming Prizes, modalities for distribution of Prizes (State, Regional, and Zonal etc.) and proposed prize presentation date.
  10. Indicate if the promo is being run on behalf of or in partnership with a third-party entity.

CORPORATE INFORMATION

  1. Incorporation documents: Certificate of Incorporation, Memorandum & Articles of Association and Application Form 1.1, status report or (Form CAC 2 and Form CAC7) as the case may be.
  2. Registered/Administrative office address of the VAS provider/Applicant.
  3. Contact details of key personnel in charge of the mobile lottery/Gaming Scheme.
  4. Financial Capability to conduct the scheme: applicant will submit a 6-months bank statement.

CONDITIONS OF APPROVAL

  1. All VAS Provider/Applicant must connect to the NLRC transaction reporting and monitoring platform within 14days of commencing the promo
  2. Permit fee of N5, 000,000 (Five Million Naira) per annum.
  3. Payment of 5% monthly gross proceeds as follows:
  4. 2% of gross proceeds as administration &monitoring fee payable to the National Lottery Regulatory Commission
  5. 3% gross proceeds payable to the National Lottery Trust Fund
  6. Submission of monthly reconciliation log/report on transactions in the approved format
  7. Payment of 5% monthly gross proceeds must reach the Commission on or before the 5th day of the succeeding month.[24]

CONCLUSION

The operation of Lottery of business even though it is legal it is highly monitored and regulated by the National Lottery Regulation Commission in accordance with the Lottery Act 2005 and the Lottery Regulations 2007, Companies and Allied matters Act and other Lottery Related Laws, with the aim to protect citizens against fraudulent lottery, gaming or gambling activities and contributing towards Economic growth. Therefore a proposed lottery business in Nigeria cannot operate legally without obtaining a License or Permit depending on the lottery business, in the prescribed manner and upon fulfillment of the requirements stipulated by the various lottery regulations governing lottery businesses in Nigeria.


[1] National Lottery Act, 2005.

[2] Criminal Code Act Cap. C38 LFN 2004.

[3] Uche Mathew And Oluwademilade Odutola,  License Requirements For Online Sports Betting Operators In Nigeria, S.P.A. Ajibade & Co. accesed on the 27th November, 2022

[4] Ibid.

[5] National Lottery Regulation, 2007, No. 106.

[6] Lagos State Lotteries (Amendment) Law 2008.

[7] National Lottery Regulation Commission, Lottery Regulation: Fg Wins Court Case To Be Sole Regulator. Available at: https://nlrc-gov.ng/lottery-regulation-fg-wins-court-case-to-be-sole-regulator/  Accessed on the 1st December, 2022. Download judgement at: chrome-extension://efaidnbmnnnibpcajpcglclefindmkaj/https://nlrc-gov.ng/wp-content/uploads/2022/08/Certified-True-Copy-of-Judgment-Ass-of-Bookmakers-v.-NLRC-ORS.pdf

[8] Ibid.

[9] Supra (n3)

[10] Emmanuel Chibuike, 7 Steps To Start a Lottery Business In Nigeria, InfoGuide Nigeria.

[11] Supra (n1).

[12] Companies and Allied Matters (Amendment) Act, CAP C20, LFN 2004.

[13] General Guidelines, available at https://nlrc-gov.ng/guidelines/ accessed on 27th November, 2022.

[14] Emmanuel Ekpenyong, Legal Framework and Prospects of Lottery Business in Nigeria, Mondaq, 03 August 2016.

https://www.mondaq.com/nigeria/gaming/504646/legal-framework-and-prospects-of-lottery-business-in-nigeria.

[15] ibid

[16] ibid

[17]National Lottery Regulation Commission, Guidelines for lottery, available at https://nlrc-gov.ng/lottery-licence/ accessed on 30th November 2022.

[18] National Lottery Regulation Commission, Guidelines for Obtaining Sports Betting Permit, available at: https://nlrc-gov.ng/sports-betting-permit  accessed on 30th November 2022.

[19] Supra (n3)

[20] Supra (n.16)

[21] Supra (n.

[22] National Lottery Regulation Commission, Guidelines for Obtaining Promotional Lottery/Csps Permit, available at: https://nlrc-gov.ng/promotional-lotteryconsumer-sales-promos/ accessed on 30th November 2022

[23] National Lottery Regulation Commission, Guidelines for Mobile Lottery/Gaming Permit, available at: https://nlrc-gov.ng/mobile-lottery-gaming/ accessed on 30th November 2022

[24] Ibid

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