What Operators Need to Know About LSLGA TAX

With approximately 70 gaming operators, 46 million active gamers, and revenue projected to reach 2.59 billion in 2025, Nigeria is the most dynamic gaming landscape in Africa.

Barely a year ago, the Supreme Court ruled that the National Lottery Act and the National Lottery Regulatory Commission (NLRC) were unconstitutional, giving the state regulators oversight on gambling. It was a big win, but probably just the beginning of another tussle.

The End or Beginning of Complexity

State regulators celebrated the move, but operators were left in limbo for a moment. In the past, they were forced to seek licenses from both the state and federal authorities. Would they begin a fresh registration process?

Then came the relief. State regulators formed the Federation of State Gaming Regulators of Nigeria (FSGRN), introducing a unitary license and excluding licensed operators from the 2025 license obligation.

While all this was going on, parliament was busy drafting the Central Gaming Bill, aiming to create a single federal regulatory framework. In December, it was sent to the president for ascent, but he declined to sign. By this time, however, the bill had already been protested by the state regulators.

January 2026 began with good news for players. The Nigeria Tax Act came into effect, excluding wagers from VAT.

And shortly after, Lagos state introduced 5% withholding tax on online bets.

A New Tax Cut Takes Effect

Lagos State began taxing 5% net winnings of online bettors, a move said to be part of the state’s drive to strengthen tax compliance, transparency, and accountability.

According to a public notice published on February 19, 2026, and signed by the CEO of the Lagos State Lotteries and Gaming Authority (LSLGA), the deduction should be applied at payout and remitted directly to the Lagos State Internal Revenue Service.

Implications for Players and Operators

LSLGA stated that the 5% withholding tax will serve as a tax credit to the player, and deductions and remittances will be handled by operators, who are required to keep proper records for transparency.

In summary, this is exactly what is implied in the new directive.

If a player wins 10,000 Naira, they only see 9,500 Naira hit their wallet.

Operators must reengineer their APIs to calculate and remit the 5% in real-time.

Players must provide their National Identification Number for due diligence

This directive applies to all Lagos-licensed operators and, by default, all players, whether they reside in Lagos or not.

A player based in Cross River or Ogun using the Bet9ja platform is liable as long as Bet9ja is licensed to operate in Lagos. Failure to comply with this directive will expose operators to the 40% penalty in the Nigeria Tax Act 2025 (NTA).

Nigeria’s Regulatory Compass

Only 45% of Nigerian states, including FCT, Lagos, and Ogun, have clearly defined regulations on gambling and betting.

Lagos State is Nigeria’s largest gambling market. With the highest number of casinos and several betting sites, it generated $243 million in 2024 alone.

To be licensed in Lagos State, applicants must be registered by the Corporate Affairs Commission and meet the following requirements of the Companies and Allied Matters Act (CAMA) 2020.

Demonstrate financial capability,

Must show local ownership according to the 2021 Law

While both local and foreign-owned or directed companies are expected to achieve a set minimum share capital, Nigerians must hold at least 15% of shares in foreign-owned gaming companies.

LSLGA has been at the center stage of Nigeria’s gaming regulation. It played a big part in the 2024 Supreme Court case, in speaking against the Central Gaming Bill, and in forming the Federation of State Gaming Regulators of Nigeria.

The withholding tax now sets a precedent in the rapidly evolving gaming market, and other states may soon follow suit. Operators and players should anticipate similar changes taking effect in other states.

Conclusion

While such directives are intended to increase revenue for the authorities, they are sure to impact player betting behaviour.

To scale in a volatile market like Nigeria, operators must ensure compliance with both federal and state tax obligations.

Gaming Advisory Africa & Velex Advisory help operators in executing a regulatory tax impact assessment to understand how the new rules affect business, and undertake tax planning and restructuring where necessary.