Lagos Introduces 5% Withholding Tax on Online Betting Winnings Amid Broader Push for Gaming Sector Compliance

The Lagos State Lotteries and Gaming Authority (LSLGA) has implemented a five percent withholding tax on the net winnings of online bettors, a measure that takes immediate effect across the state’s regulated gaming market. The announcement was made on Thursday by LSLGA Chief Executive Officer Bashir Are, who confirmed that the deduction will apply to all gaming platforms licensed in Lagos, regardless of whether the player resides in the state.

According to the public notice issued by the regulator, the tax will be deducted at the point of payout and transferred directly to the Lagos State Internal Revenue Service. The directive makes clear that all Lagos-licensed operators must comply with the requirement without exception.

Authorities framed the new policy as part of a wider initiative aimed at tightening tax compliance, improving transparency, and strengthening accountability within Nigeria’s rapidly expanding gaming industry. In recent years, the country’s gambling market has grown significantly, fuelled by the proliferation of online betting platforms and rising participation among younger, digitally connected consumers. Legal gaming activities in Nigeria include sports betting platforms such as Bet9ja and BetKing, alongside lotteries, casinos, and promotional competitions.

The LSLGA reiterated that operators must be duly registered with the Corporate Affairs Commission and hold a valid licence from the state regulator. As Nigeria’s commercial centre, Lagos accounts for a substantial share of national gaming activity and frequently serves as a proving ground for regulatory reforms that may later influence other jurisdictions.

At the federal level, the primary legislative instruments governing gaming remain the National Lottery Act of 2005 and the National Lottery Regulation of 2007. However, individual states retain their own gaming and tax laws. In Lagos, regulatory authority is derived from the Casino and Gaming Regulatory Authority Law and the Lagos State Lottery Law. By contrast, Anambra State operates under its Anambra State Gaming Law. In 2024, the Supreme Court of Nigeria affirmed that states hold primary jurisdiction over gaming matters, reinforcing the decentralised nature of regulation in the sector.

The introduction of the withholding tax is intended to ensure that Lagos captures revenue generated by online platforms while reinforcing compliance obligations for licensed operators. Nonetheless, industry observers cited in local media caution that increased tax burdens could drive bettors toward unlicensed or offshore operators, potentially undermining the state’s revenue and enforcement objectives.

Nigeria continues to operate without a unified national regulatory framework. In December 2025, President Bola Ahmed Tinubu declined to sign the proposed Central Gaming Bill, which sought to centralise oversight under a single national commission. As a result, regulatory authority remains fragmented across states, creating inconsistencies in rules and enforcement practices. Analysts argue that this patchwork system complicates compliance, deters investment, and constrains the industry’s long-term growth potential.

Comparisons with other African markets highlight divergent regulatory philosophies. Kenya has adopted a five percent withholding tax, though it applies specifically to withdrawals, alongside a five percent excise duty on deposits. In South Africa, policymakers have proposed a significantly higher 20 percent withholding tax, a measure designed in part to discourage excessive gambling behaviour. Meanwhile, Ghana imposes a 20 percent tax on Gross Gaming Revenue (GGR) for operators. However, the country’s decision to repeal its winnings tax illustrates the political sensitivity surrounding direct taxation of bettors.

These regional contrasts underscore the balancing act facing Lagos authorities. While Lagos and Kenya appear primarily focused on revenue mobilisation, South Africa’s approach reflects a stronger emphasis on social considerations, and Ghana’s reversal demonstrates the potential for public resistance. For Lagos, the central challenge will be to generate sustainable tax revenue while maintaining fairness, ensuring compliance, and preventing the migration of players to unregulated markets.

By fLEXI tEAM