Betting companies are no longer a novel thing in Nigeria. With the growing number of betting companies and businesses in Nigeria, the betting company accounts for a large part of the country’s economy. A 2019 report by Research and Markets valued the Nigerian sports betting industry at 2 billion dollars and growing. The legalization of betting activities, increased internet access and usage, sports, youth unemployment, and a lucrative value chain are some of the factors responsible for the massive growth of the betting industry in Nigeria.

Betting was formally legalized in Nigeria in 2005 by virtue of the National Lottery Act 2005. The most popular form of betting in Nigeria is sports betting. In 2020, it was reported that around 60 million Nigerians actively participate in placing bets on sports. Sports betting has unquestionably gained popularity in the nation.

1.0 What does betting entail?

Generally, betting involves an action of gambling money on the outcome of a race, game, or other unpredictable event. No law in Nigeria expressly defines what betting is. Betting falls under the purview of lottery in Nigerian law.

The Criminal Code Act defines betting to include any game, method, or device whereby money or money’s worth is distributed or allotted in any manner depending upon or to be determined by chance or lot.[1] It is important to note that the Criminal Code Act uses the word “lottery”. Nevertheless, the words are synonymous. A more comprehensive definition is given in the National Lottery Act, which states; a lottery includes any game, scheme, arrangement, system, plan, promotional competition, or device for die 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 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.[2]

1.1 Difference between Betting and other types of gaming activities

Before starting a betting company, it is important to understand the difference between betting and other types of activities within the same industry. As stated earlier, there is no express definition for betting under Nigerian law. Likewise, there is no clear-cut distinction between betting and such other similar activities under the law. However, a person intending to set up a betting company ought to know the difference. The major forms that one must consider are gambling, gaming, lottery and betting

1. Gambling: This is the wagering of something of value on an event with an uncertain outcome with the intent of winning something else of value or gaining more in addition to the thing that was wagered. It is purely based on probability or luck.
2. Gaming: The act of playing games for stakes.
3. Lottery: This involves drawing lots in which prizes are distributed to the winners among persons buying a chance.
4. Betting: This involves gambling money on the outcome of an unpredictable event like a race, sport, or game.

2.0 Regulatory Framework for betting in Nigeria

In Nigeria, betting is regulated at both the Federal and State levels. Betting falls within the purview of gaming in Nigeria. The Criminal Code Act sets out what constitutes legal and illegal forms of gaming.  Betting is one of the legal forms of gaming, as provided under the Criminal Code.

The National Lottery Act (NLA) 2005 establishes “The National Lottery Regulatory Commission” (NLRC). The NLRC 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, and promoting transparency and integrity in the operation of a lottery and gaming business nationwide. The NLRC grants three categories of licenses:

• Lottery licence
• Sports betting Licence
• Promotional Licence[3]

To regulate commercial gaming and lottery operations, some states have also enacted municipal laws and regulatory bodies. A good example of such is The Lagos State Lottery Law 2004 (as modified). This law established the Lagos State Lottery Board to manage the licensing and control of lottery and gaming activities within the state. The law was amended in 2008. Other states also have similar legislation.

3.0 Requirements for starting a betting company in Nigeria

Before starting a betting company, there are several procedures that must be taken

• Company registration: For registering a betting company, ₦20,000,000 in share capital is required (Twenty Million Naira). There must be a minimum of two shareholders, two directors, and a secretary. 

• National Lottery License Acquisition: By virtue of the National Lottery Act 2005, it is mandatory to procure a license in order to operate a betting company. The license has a duration of 10 years. Before the license is granted, there are some requirements that must be fulfilled by the applicants. An applicant must submit a proposal to the National Lottery Regulatory Commission (NLRC) with the following information and documents:
• Completed National Lottery Regulatory Commission application form
• An application letter stating the intention of the applicant
• Non-refundable Application and processing fee of N2,000,000.00 (Two Million Naira Only) payable to the Commission
• License Fee 100,000,000.00 (One Hundred Million Naira Only) upon successful completion of all documentary processes.

3.2.0. Obtaining State License

It is important to note that apart from the national license, each state has its own lottery regulations and regulatory bodies in place. For example, in Lagos State, The Lagos State Lotteries Board (LSLB) regulates and controls every aspect of lotteries, including Betting. As a result, a person or corporate body that intends to set up a betting company in Lagos State must obtain a license from the Lagos State Lotteries Board regardless of any license previously procured from the national commission or any other state agency.^[4]

The requirements for obtaining license in Lagos State are as follows:

1. Minimum Share Capital of N20,000,000 (Twenty Million Naira). Shareholders are not obligated to make financial contributions to this amount; it is simply the minimum worth of the business shares at the time of registration.
2.  Application Fee: N500,000 (Five Hundred Thousand Naira).
3. Initial Licence Fee: N50,000,000 (Fifty Million Naira).
4. Annual Renewal Licence Fee: N10,000,000 (Ten Million Naira).

It is important to note that there is a local content requirement for operating an Online Sports Betting company in Lagos. Total Foreign ownership is not permitted as Nigerians are required to hold at least 15% of shares in the foreign-owned company.

Where a license has been successfully procured from the Lagos State Lottery Board, the licensee will be able to operate a betting company in Nigeria even without obtaining the National license. However, where the licensee wishes to expand his company to other states or operate at the national level, a licence must be obtained from the National Lottery Commission or the regulatory body for the state.

Procedure

• Submission of application to the Lagos State Lotteries Board alongside the required documents and a non-refundable application fee of ₦500,000 (Five Hundred Thousand Naira).
• Upon submission of the application, the Board will conduct due diligence on the application. This takes a minimum of 15 working days.
• The applicant will subsequently be invited to make a presentation to justify the grant of the betting license.
• Where the applicant’s presentation is successful, the Licence fee of ₦50,000,000 (Fifty Million Naira) is to be paid.
• After payment, an Approval-In-Principle (AIP) will be issued. This is a temporary Licence granted for a period of ninety days.
• The final license is issued upon the fulfillment of all the conditions stated in the AIP.

The duration of the licence is twelve months and renewable annually. Renewal is not automatic but subject to satisfactory performance and compliance with the terms and conditions of the license. Licences for public online lottery are for a term of five years, renewable every five years at the discretion of the board.[5]

CONCLUSION

Despite the massive interest in the betting industry, its growth seems to be hampered by the expensive licencing procedure. Reduction in the cost of licencing will aid the growth of the industry and encourage foreign participation. It is important to note that just like every other business, there is a need to conduct the affairs of a betting company diligently. In starting up, the place of professional advice should not be trivialised. Special attention should be paid to government policies, laws, and regulations, and a proper SWOT analysis conducted before venturing into the business, as this would help to ensure the smooth running of the business.

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[1] Section 240 Criminal Code Act Cap 38 LFN 2004

[2] Section 57 National Lottery Act 2005

[3] Uche Mathew and Oluwademilade Odutola ‘Licensing requirements for online sports betting operators in Nigeria’ <https://spaajibade.com/> 

[4] Seun Timi and Aderonke Aderonke Alex ‘How to start an online sports betting business in Nigeria’ <https://pavestoneslegal.com/tag/national-sports-betting>

[5] Section 15-16 Lagos State Lotteries (Amendment) Law 2008

Written by Chiamaka Ognonnaya and Oluwapelumi Adejumo for The Trusted Advisors

Email us: info@cms.trustedadvisorslaw.com

Telephone Number: +234 810 159 9159