Lagos Introduces 5% Withholding Tax on Online Betting Winnings

The Lagos State Lotteries and Gaming Authority (LSLGA) has rolled out a new five percent withholding tax on the net winnings of online bettors, with immediate effect.

The announcement was made on Thursday by the agency’s Chief Executive Officer, Bashir Are, who confirmed that the tax will be deducted at source across all gaming platforms licensed by Lagos State. This applies regardless of whether the player resides within the state or outside it.

According to a public notice issued by the regulator, the tax will be automatically withheld at the point of payout and subsequently remitted to the Lagos State Internal Revenue Service.

The move is part of a broader government strategy aimed at improving tax compliance while enhancing transparency and accountability within Nigeria’s rapidly expanding gaming industry.

The notice further explained that Nigeria’s gambling sector has witnessed significant growth in recent years, fueled largely by the rise of online platforms and increased participation among young, tech-savvy individuals. Legal gaming activities in the country include sports betting—featuring operators such as Bet9ja and BetKing—as well as lotteries, casinos, and promotional competitions.

In addition, the LSLGA reiterated that all operators must be duly registered with the Corporate Affairs Commission (CAC) and obtain proper licensing from the authority. Media reports frequently highlight Lagos as Nigeria’s commercial hub, accounting for a substantial portion of gaming activity and often serving as a testing ground for new regulatory measures.

At the national level, the regulatory landscape is still guided by the National Lottery Act of 2005 and the National Lottery Regulation of 2007. However, individual states maintain their own gaming and taxation laws. In Lagos, oversight is exercised under the Casino and Gaming Regulatory Authority Law and the Lagos State Lottery Law, which was amended in 2008. By contrast, Anambra State operates under its Gaming Law of 2005. A 2024 Supreme Court ruling reinforced the authority of states, confirming that they hold primary jurisdiction over gaming regulation, as cited in several local media reports.

The LSLGA stated in its notice that the introduction of the withholding tax is intended to ensure that revenue from online gaming platforms is properly captured while strengthening regulatory compliance. Nonetheless, industry observers quoted in local media have warned that increased taxation could drive bettors toward unlicensed or offshore platforms, potentially undermining the policy’s objectives.

Nigeria continues to operate without a unified regulatory framework. In December 2025, President Bola Ahmed Tinubu declined to assent to the proposed Central Gaming Bill, which sought to centralize oversight under a single national commission. As a result, states retain independent authority, leading to a fragmented system with inconsistent rules. This patchwork arrangement complicates enforcement, discourages investment, and poses challenges to the sector’s long-term growth.

Comparatively, other African jurisdictions have adopted differing approaches. Kenya has implemented a similar five percent withholding tax, though it applies only to withdrawals, alongside a five percent excise duty on deposits. South Africa, on the other hand, has proposed a significantly higher 20 percent withholding tax, primarily aimed at curbing gambling behavior. Meanwhile, Ghana imposes a 20 percent tax on Gross Gaming Revenue (GGR) for operators, but its decision to repeal a winnings tax underscores the political sensitivity surrounding direct taxation of bettors.

These regional contrasts highlight varying priorities. While Lagos and Kenya appear focused on revenue generation, South Africa emphasizes social regulation, and Ghana’s policy reversal illustrates the risks of public backlash. For Lagos, the key challenge will lie in striking a balance between maximizing revenue and maintaining fairness, compliance, and player participation within the regulated market.

By fLEXI tEAM