PROCEDURE FOR REGISTRATION OF BETTING COMPANIES IN NIGERIA
GODWIN ESSAH
INTRODUCTION
In recent times, there has been a proliferation of betting companies in Nigeria as a significant portion of Nigeria’s GDP is derived from the betting industry, which is rising in both quantity and size in the nation. However, betting was not legally permissible in Nigeria up until 2005 when the National Lottery Act was enacted to give legal approval to betting in Nigeria. Consequently, investors (both foreign and indigenous) can take advantage of this lucrative industry to improve the country’s GDP. Sports betting is the most common type of gambling in Nigeria as approximately 60 million Nigerians were estimated to be actively involved in sports betting as at 2020. Quite interestingly, sports betting has become more and more popular in the country.
In Nigeria, there appears to be no specific law that defines betting. Typically, betting involves staking money on the result of a game, race, or other uncertain event. Gambling is governed by the Nigerian lottery laws. Consequently, the National Lottery Act gives a comprehensive definition of what constitutes lottery as follows:
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.
It is crucial to comprehend the distinctions between betting and other forms of operations in the same industry before launching a betting business. As previously said, Nigerian law does not define betting specifically. Similarly, the law does not distinguish clearly between betting and other related acts. A person planning to establish a betting business should be aware of the distinctions, though. The primary kinds that need to be taken into account include gaming, betting, lotteries, and gambling.
While gaming has to do with engaging in stakes-based gaming, betting refers to the act of placing financial bets on the results of erratic events such as games, races, or sports. On the other hand, lottery is selling chances to others, while the winners get prizes by a drawing by lots. Gambling is the act of staking something valuable with the hope of winning something more valuable or making a profit in addition to the staked item on an event with an unpredictable conclusion. It is entirely dependent on chance or probability.
HOW TO START A BETTING COMPANY IN NIGERIA.
The procedures for commencing betting business in Nigeria are as follows:
1. Registration of Company: The first step for commencing any business in Nigeria is the registration with the Corporate Affairs Commission. The share capital required in order to register a betting company is N30,000,000 (Thirty Million Naira only) for Nigerian Companies without foreign participation and N100,000,000 (One Hundred Million Naira only) for a company that has foreign participation in its directorship. The intending betting company must also have a minimum of two directors, a secretary and two shareholders.
2. Acquisition of National Lottery License: The National Lottery Act of 2005 stipulates that obtaining a license is mandatory for running a betting business. The license is valid for ten years. There are some conditions that applicants must meet in order for their license to be approved. The National Lottery Regulatory Commission (NLRC) must receive a proposal from an applicant together with all of the necessary information and documents:
i. A processing fee of N2,000,000.00 (Two Million Naira only) which shall be non-refundable and payable to the Commission.
ii. A duly completed National Lottery Regulatory Commission Application Form
iii. An application letter which sets out the applicant’s intention.
iv. Upon successful submission of all documents, a license fee of N100,000,000.00 (One Hundred Million Naira only)
ACQUIRING A STATE BETTING LICENSE IN LAGOS STATE
It is significant to note that every state has its own regulatory agencies and lottery laws in place in addition to the federal license. For instance, the Lagos State Lotteries Board (LSLB) oversees and administers all facets of lotteries in Lagos State, including betting. As a result, regardless of any licenses previously obtained from the national commission or any other state agency, an individual or corporate organization intending to establish a betting enterprise in Lagos State must seek a license from the Lagos State Lotteries Board.
In Lagos State, the following criteria must be met in order to be granted a license:
1. A minimum share capital of N20,000,000 (Twenty Million Naira only). This amount need not be contributed by all shareholders involved but only shows the minimum worth of the company during registration.
2. An application fee of N500,000 (Five Hundred Thousand Naira only).
3. An initial license fee of 50,000,000 (Fifty Million naira only).
4. An annual renewal license fee of N10,000,000 (Ten Million Naira only).
It must be noted that in operating an online betting company in Lagos state, there is a local content requirement for all persons who intend to carry out sports betting business. It should also be noted that 100% foreign ownership of online sports betting is not allowed as Nigerians are expected to hold at least 15% of the shares in the case of a foreign-owned company.
Upon obtaining a license from the Lagos state Lottery Board, the licensee will be able to run a betting business in Nigeria even in the absence of a national license. However, a license from the National Lottery Commission or the state’s regulatory agency is required if the licensee wants to grow his business into other states or conduct nationwide operations.
The procedures for registering a betting company in Lagos state are as follows:
1. An application must be submitted to the Lagos State Lotteries Board along with the necessary documents with an application fee of N500,000 (Five Hundred Thousand Naira only) which shall be non-refundable.
2. After the application has been submitted, the Board will then undertake due diligence on the submitted application. A minimum of 15 working days is required to conduct the due diligence.
3. The applicant would then be called to present to the commission a justification for the grant of a betting license.
4. Upon a successful presentation by the applicant, the applicant would be required to pay the sum of N50,000,000 (Fifty Million naira only).
5. After making the payment, a temporary license known as an Approval-In-Principle (AIP) will be issued to the applicant/licensee. The AIP lasts for a period of 90 days.
6. It is upon the fulfillment of the conditions set out in the AIP that the final license would be issued.
The license is valid for an entire twelve months and is renewed every year. The license must be performed satisfactorily and in accordance with its terms and conditions in order for it to be automatically renewed. Public online lottery licenses are valid for five years, renewed every five years at the board’s option.
CONCLUSION
The difficulties involved in obtaining a sports betting license may discourage new entrants, particularly foreign investors, despite the sports betting industry’s remarkable turnover. More specifically, one of the biggest issues facing the sector is the overlap in state and federal regulatory roles. Sports operators in Nigeria are plagued by the ongoing conflict between the NLRC and the LSLB over which organization is constitutionally authorized to oversee gaming activities and grant licenses for betting establishments. For example, certain sports betting firms who had received licenses from the NLRC were recently placed on a blacklist by the LSLB. In order to prevent problems with multiple taxation and licensing and to bring confidence and predictability to the process, this anomaly needs to be resolved as soon as feasible.
The cost of the licensing process appears to be impeding the growth of the betting industry, despite the great interest in it. Lowering the cost of licensing will promote international involvement and help the business flourish. It is crucial to remember that running a betting company requires careful management, just like running any other kind of business. It is important to admit that expert counsel is valuable when first starting out. In order to maintain the smooth operation of the business, special attention should be paid to government policies, laws, and regulations as well as doing a good SWOT analysis before embarking into the business.
REFERENCE
[1] Samson Ojodomo Onuche, “Legal and Institutional Framework for Gambling/Online Gambling in Nigeria.” Benson Idahosa University, Law Journal 5, no. 17 (2019).
[2] Chiamaka D. Ogbonnaya and Oluwapelumi Adejumo, Starting A Betting Company in Nigeria (2023). Available at https://www.mondaq.com/nigeria/gaming/1280356/starting-a-betting-company-in-nigeria Accessed 30th November 2023
[3] Olaore, Gbemi Oladipo, Bimbo Onaolapo Adejare, and Ekpenyong Ekpenyong Udofia. “The nexus between the increasing involvement of youth in betting games and unemployment: The Nigerian Perspective.” Journal of Humanities and Applied Social Sciences 3, no. 3 (2021): 163-181.
[4] Section 57 National Lottery Act 2005
[5] Guidelines for Obtaining Sports Betting Permit, available at: https://nlrc-gov.ng/sports-betting-permit/ accessed on 16th November 2023.
[6] Section 12 Lagos State Lotteries (Amendment) Law 2008
[7] Section 53 Lagos State Lotteries (Amendment) Law 2008
[8] Section 15-16 Lagos State Lotteries (Amendment) Law 2008
[9] Adeleye Awakan Regulator continue battle state stand on blacklisting April 2020 available at https://e-playafrica.com/regulator-continue-battle-state-stand-on-blacklisting/ Accessed on 27 November 2023.
