INTRODUCTION
Sports betting is an extremely popular pastime of sports fans, enthusiasts and risk takers that has crystallised globally into a $235-billion US Dollar industry. It involves predicting the outcome of games or sports events and placing wagers on these predictions.
The practice has grown significantly in popularity, driven by both physical betting shops and online platforms and has become a major part of life in Nigeria, influencing both culture and the economy. With millions participating, it is an important source of recreation and revenue to the economy.
The surge in popularity of sports betting means there is a real need for systematic regulation to standardise the practise, maintain integrity in betting activities, protect consumers, and mitigate associated risks such as addiction and fraud. For example in the United States of America, the documented amount of money bet on legal sports betting was $120 billion US Dollars in 2023 and contributing to this total were 16% of online sports gamblers who met the medical criteria for a gambling disorder.
Furthermore, from this data, in 2018, when the industry was much smaller, 75% of undergraduate students gambled. This latter statistic is quite alarming especially given the very youthful demographic structure of Nigerian society and its potential propensity towards gambling and possibly addiction if left unchecked.
This is a problem that is likely to worsen as this activity increases in ubiquitousness and will have to be managed and appropriately regulated if the Nigerian economy is to reap the much-welcomed revenues from this industry without a serious social crisis developing.
REGULATORY LANDSCAPE
The regulation of sports betting in Nigeria is currently bipartite, with compliance obligations and regulation at both the state and federal government levels for operators and sponsors of lottery and gaming businesses. This has caused some confusion as to who the appropriate regulator is. A notable instance of such confusion occurred in Lagos in 2023 when over twenty betting companies, duly licensed by the National Lottery Regulatory Commission (NLRC), the Federal Regulator, and operating in Lagos State, were harassed by the Lagos State.
[1] https://www.ncpgambling.org/wp-content/uploads/2023/09/Sports-gambling_NCPGLitRvwExecSummary.pdf
Lotteries and Gaming Authority (LSLGA) for not having LSLGA licenses. This prompted the NLRC to issue a statement asserting that federally licensed operators are legally authorised to operate nationwide. This, however, has not settled the dilemma for stakeholders conclusively.
The conflict between Federal and State regulations has resulted in several court cases with conflicting judgments, with some favouring the Federal regulator and others supporting State regulators. In Association of Nigerian Bookmakers v.
The National Lottery Regulatory Commission & Ors., the Federal High Court sitting at the Lagos Judicial Division, held that the NLRC has the exclusive power to regulate sports betting business across the Federation.
The Court also issued an order of perpetual injunction restraining the Lagos State Lotteries Board from demanding and collecting regulatory fees, taxes and levies from sports betting companies in Lagos State. However, in a puzzling twist of judicial events, the Lagos State High Court, in a suit filed by the Lagos State Lotteries and Gaming Authority against two betting companies:
Shade International Gaming Ltd (trading under the name and style of Betika) and Neomobile Entertainment Limited, per Justice Atinuke Ipaye held that matters relating to lottery, betting, gaming and other related connected activities are not specified or contained in either the Exclusive or Concurrent Legislative List, and therefore the National Assembly cannot constitutionally legislate on such matter.
Analysts and operators now keenly await the decision of the Supreme Court in SC/1/2008 filed by the Attorney General of Lagos State against the Attorney General of the Federation regarding who controls and regulates the gaming and lottery sector, to finally settle the matter as to which regulator has regulatory oversight on the gaming and lottery sector.
DUAL REGULATION; THE STATUS QUO
The National Lottery Regulatory Commission (NLRC) oversees the licensing and regulation of sports betting companies in Nigeria at the Federal level. States also have their own regulatory bodies, such as the Lagos State Lotteries and Gaming Authority, which manage the activities of betting companies within their jurisdictions. In Nigeria therefore, acquiring and operating a license for sports betting involves navigating both Federal and State levels of regulation, depending on the kind and scope of the intended betting business.
For those planning to offer online betting services, a Federal sports betting license is required from the NLRC. However, if the aim is to establish physical betting shops
[2] https://nlrc-gov.ng/wp-content/uploads/2022/08/Certified-True-Copy-of-Judgment-Ass-of-Bookmakers-v.-NLRC-ORS.pdf
[3] https://sunnewsonline.com/the-lagos-court-rules-says-fg-lacks-authority-to-issue-license-and-regulate-lotteries-and-gaming-within-federating-states/
[4] https://www.vanguardngr.com/2023/11/lottery-regulation-feud-supreme-court-to-hear-suit-15-years-after/
Within a specific state, applicants must secure both a national license from both the NLRC, and a gaming license from the State authority i.e State regulator for example LSLGA
ROLES AND FUNCTIONS
National Lottery Regulatory Commission
Established by the National Lottery Act, the NLRC is responsible for ensuring that all lottery and sports betting activities in Nigeria are conducted fairly and transparently.
It enforces compliance with national laws and regulations, providing a structured framework within which betting companies must operate, thereby protecting the interests of players, bettors, stakeholders, and the general public.
NLRC issues licenses to sports betting operators after a process of vetting to ensure that only reputable and financially stable companies are allowed to operate. Licensing helps to maintain industry standards and protect consumers from fraudulent operators.
The NLRC issues 5 categories of licence namely:
- Lottery License
- Sports Betting Permit[5]
- Interactive/Mobile Lottery/Gaming[6]
- Promotional Lottery(CSPs)[7]
- Casino Gaming Permit(CGPs)[8]
[5] Required for sports betting operations.
[6] 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.
[7] Applicable for entities 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).
[8] Required for casino gaming operations.
State Lottery Regulation
The Lagos State Lotteries and Gaming Authority Law, 2021 (the Law) establishes the Lagos State Lotteries and Gaming Authority (the Authority) to regulate betting activities in Lagos State. The Authority is empowered to license and regulate lotteries and lottery operators, as well as several other gaming activities and their operators.
Applicants seeking a license must comply with the following legal requirements:
(a) implementing data protection and privacy safeguards;
(b) establishing protections for underage, underprivileged, and vulnerable individuals to prevent exploitation and mitigate harmful or addictive gaming behaviors;
(c) ensuring robust consumer protection measures are in place; and
(d) providing support and rehabilitation for those affected by harmful effects of gaming.
Key employees of the Applicant are required to be verified by the Authority and they must show evidence of:
- Undertaking responsible gaming training from a list of providers accredited by the Authority.
- Undertaking an anti-money laundering training programme in accordance with extant anti-money laundering legislation.
Operators of gaming or lottery houses (licensees) are required to:
- Create well-defined policies for customer service to evaluate and manage various situations;
- Handle the collection and processing of customers’ information in line with the procedures established by the Law and other relevant legislation;
- Ensure that information regarding their complaint procedures is available in multiple formats, including any specific formats mandated by the Authority.
Other states in Nigeria, such as Cross River, Rivers, Edo, Ogun, and Oyo, regulate the operation of pool betting, gaming, and lottery activities through their respective Internal Revenue Services or other dedicated regulatory agencies.
State regulation is very well obtainable in the United States where licensing and regulation of sports betting operators are primarily handled at the state level. Each State with legalized sports betting has its own regulatory body, such as; Nevada Gaming Control Board (NGCB), New Jersey Division of Gaming Enforcement (DGE), Pennsylvania Gaming Control Board (PGCB), Michigan Gaming Control Board (MGCB), California Gambling Control Commission (CGCC), etc.
This approach allows states to tailor their sports betting regulations to their specific needs and realities.
CONCLUSION: THE FUTURE OF SAFE SPORTS BETTING AND GAMBLING
Regulation of the sports betting sector goes beyond mere collection of levies and duties from the operators. It must be ensured that betting activities are conducted in a manner that is consistent with public policy and a regard for mental health, wellbeing and social stability. It is not in doubt that the lucrative financial turnover of the betting industry is very attractive and is no doubt a main driver for the struggle for jurisdiction to regulate the industry discussed above. However, the interest and welfare of the actual users should be given priority of place over the economic and fiscal considerations which the government stands to gain from the industry.
In the United Kingdom, protection of vulnerable persons from the hazards of gambling is given priority by the UK Gambling Commission. The License conditions and Codes of Practice (“LCCP”) mandates licensees to have and put into effect policies and procedures intended to promote socially responsible gambling. This includes setting limits on the value of lottery tickets which may be sold to a person, whether as part of a single transaction or over a given period of time. Additionally, where customers hold more than one account with them, the licensee must have and put into effect procedures which enable them to ensure that individual financial limits are implemented across all of a customer’s accounts.
In Lagos, the Lagos State Lotteries and Gaming Law has made provisions for the protection of vulnerable persons, categorizing vulnerable persons as those too young to engage legally in a lottery and gaming activity or those that are easily physically or emotionally influenced or mentally hurt by gaming activities.
As a condition for grant of license, betting companies are required to put in place measures to protect underage, underprivileged and vulnerable people from exploitation, harmful or addictive gaming tendencies.
The Law further empowers the Lagos State Lotteries and Gaming Authority in granting or reviewing licenses, to limit amounts that may be staked. Licencees are required to provide customers with a variety of information and tools to assist them in making informed decisions about their participation in games, including information that could assist customers in determining risks associated with gambling participate within time, frequency and financial limits, timeouts and self-exclusion.
Implementation of the Law must be given priority by Operators and Regulators to ensure that only legally and even mentally and financially eligible persons are permitted to take part in betting activities. Technology and other identification data such as BVN and National Biometric information create avenues and opportunities for more effective and personalized regulation.
The authors suggest that the age of online betters can be authenticated through the use of biometric registration in order to ascertain the true identity of the betters and prevent underage betting. Betters could also be categorized into various risk categories depending on their age, income or financial capacity, and other metrics to determine what limits should be placed on betters in the various categories based on their estimated financial strength and other exposures such as mental, health, and others that can be contemplated.
On the compliance side of things, while the squabble to regulate the lucrative betting industry persists between the Federal and State governments, it is advisable that operators strive to ensure compliance on both fronts. That way, operators can eliminate the risk of undue disruptions to their business operations on regulatory grounds.
