By Babatunde Ibidapo-Obe, Partner, AIO Legal Practitioners and BettingInAfrica.com Editorial Advisory Board Member.
The Nigerian gaming sector is an industry which though still in its infancy, has been growing in leaps and bounds in the past few years. Particularly, the Sports betting industry has tapped into Nigerians love for football to create a swath of excited punters chancing their luck weekly in bets on the world’s exciting football leagues.
Football betting has served as a gateway to other forms of sports betting, providing the necessary bedrock to provide punters with familiarity and then leading them to try out other types of sports – tennis, basketball, racing etc.
The biggest challenge posed to the operators in the Nigerian gaming industry is duplicated regulation and taxation. The operators are being regulated by at least 2 gaming regulators (sometimes up to 5 regulators). This is contributing to a high set up costs and sometimes to a tedious reporting/regulatory interface process.
There is currently a lot of uncertainty in the gaming industry in Nigeria around which level of Government has the power to regulate the industry. Both the Federal Government and the State Governments are currently competing for who has powers to legislate and regulate on gaming in Nigeria. Neither tier of government wants to cede the power to the other, and there is therefore currently an impasse.
Nigeria operates a federal legislative system. A Federal legislative system means that both the Federal Government (through the National Assembly), and the State Governments (through their respective State Houses of Assembly) can make laws.
However, the power to legislate is constitutionally divided along 3 lists – the Exclusive list, the Concurrent list, and the Residual list. The Exclusive list contains all items which the National Assembly can create laws on, the Concurrent list contains all the items which both the National Assembly and the State Houses of Assembly can create laws on, and finally the Residual list (which is technically not a list) is all the items not mentioned in either the Exclusive or Concurrent lists, and therefore only the State Houses of Assembly can legislate on. Both levels are claiming supremacy with respect to the power to make laws on gaming/lottery business.
Such a state of affairs is clearly not an ideal one, and in fact is a reason some foreign operators have cited for being slightly circumspect about entering the Nigerian gaming market.
Crux of the Matter
So, what exactly is the crux of the issue between both the Federal and State Governments? Well, in a nutshell, the issue is this – gaming/lottery is not mentioned in either the Exclusive List or the Concurrent List; the argument by the State Governments is that since lottery/gaming is not mentioned in either lists, then the power to legislate on it should fall under the Residual List i.e. the State Government has the legislative powers.
On the flip side, the position of the Federal Government is that that lottery/gaming falls under interstate commerce and interstate commerce is listed on the Exclusive List. Therefore, since interstate commerce is on the Exclusive List, the Federal Government should have powers to legislate on it to the exclusion of all others.
The State Governments also contend that by virtue of the fact that the Taxes and Levies (Approved List for Collection) Act (this is a list which itemises what taxes each level of government is authorised to collect) specifically lists Pools betting and lotteries, gaming and casino taxes as to be collected by the States, then they should have powers to legislate on it.
Unfortunately, the people bearing the brunt of this impasse is the gaming operators and therefore majority of the operators are having to apply for a gaming licence from the Federal agency and then make subsequent applications for licences to State agencies.
Hope for a solution?
As the matter is one of legislative supremacy between 2 levels of Government, the appropriate arbiter is the Judiciary. This tussle has therefore spilled into the courts and there are presently a number of cases where the courts have been asked to make a pronouncement on which level of Government has supremacy. There was a recent amendment to the Federal Law on lottery and sports betting in Nigeria, the National Lottery Act (Amendment) Bill 2017 which was refused Presidential Assent by the Acting President Yemi Osinbajo in April 2017 on the grounds that the matter of legislative competence was pending before the courts. The decision of the court is therefore highly anticipated. However, court cases are notoriously slow in Nigeria and for there to be some finality on the matter, the case would have to be determined by the Supreme Court.
Pending the determination of the courts, there have been sounds by the Federal and State Governments of negotiations and conversations of a solution between both levels. This would obviously be a quicker option, but whether or not the will to force through a solution exists, remains to be seen.
What are the options for Gaming Operators?
As with every legal problem, the first step is to seek out experienced and innovative advice from professionals.
Intending operators in the gaming industry in Nigeria should consider alterations and adjustments to their business model and expansion road to account for some of these regulatory challenges, and in fact certain approaches can ensure this issue of multiple regulation is entirely avoided however this is based on the business model of the operators.
Please note that this information is provided for general informational purposes only and is not intended to be legal advice. No lawyer-client relationship is formed nor should any such relationship be implied. It is not intended to substitute for the advice of a qualified lawyer. If you require legal advice, please consult with a qualified lawyer.