Nigerian States Win Lottery Regulation Rights as Supreme Court Rules in Favour

Following years of power struggles, the Supreme Court of Nigeria made a landmark decision, granting states the exclusive rights to regulate the online sports betting industry. This judgment comes after a 15-year legal wrestle between the federal government and state authorities over lottery legislation.

On November 22, 2024, a seven-member panel led by Uwani Abba Aji declared that the 2005 National Lottery Act was unconstitutional and should no longer be applied in states in the federation.  The National Assembly, under the constitution, has no constitutional authority to legislate issues related to the lottery, according to local media reports.

The Chronicles 

Lagos State, Nigeria’s commercial hub, challenged the National Lottery Act in a legal battle which commenced in 2008. Lagos contended that the federal government’s claim to regulate the gaming sector encroached on state powers.

At the core of the judicial case was determining whether the gaming and lottery sector fell under the Exclusive powers of the National Assembly, the Concurrent powers shared by the National Assembly and the States, or the Residual powers assigned to the State Houses of Assembly.

In the federal government’s exclusive legislative list are 68 items solely allocated for the National Assembly to legislate upon.  These policies and jurisdiction are usually sensitive areas of national importance, not residual issues like the lottery, as argued by the Lagos government.

Initially, the Attorney General of Lagos State initiated the case but the remaining 35 states joined as co-defendants, solidifying the struggle.  

The National Lottery Regulatory Commission (NLRC), formed through the National Lottery Act appealed in the Court of Appeal, prompting the states to approach the Supreme Court of Nigeria, granting them victory.

Several sections of the National Lottery Act 2005 were discovered to be inconsistent with the nation’s constitution causing an order by the Supreme Court to nullify the whole National Lottery Act. 

The Implication of the Verdict

“The declaration that the National Lottery Act is unconstitutional and void, highlights the importance of constitutional adherence in legislative processes,” said Samuel Rowland, the Chief Operations Officer of the Lagos State Lotteries and Gaming Authorities.

He described the ruling as reinforcing the principle of federalism in Nigeria, ensuring that powers not explicitly granted to the federal government remain with the states.  “This is a pivotal decision that could shape the future of gaming regulation in the country,” Rowland added.

The ruling addressed the longstanding issue of multiple taxation and licensing fees.

Jokotoye Olawale, Head of Nigeria's Retail Operations at Betano, a sports betting platform, explained that gaming businesses previously had to secure both a national license and a state license, leading to multiple taxation that stifled their operations.

“So many investors have left because of this multiple taxation. There are excess payments for license renewal and monthly percentages,” he said. “There was indeed, a need for a unified payment system by the state regulators that allows lottery agencies to operate and grow.”

In Nigeria, gambling is more of a grassroots business, and gaming operators believe that the state understands their operations better than the federal government. “This ruling supplies directions to the gaming operators and foreign investors in the sector since the regulators are no longer as many as before,”  Fisayo David, who headed the operations of Oyo State Gaming Board, told SportsBoom.com.

He noted that this development has opened a new source to generate revenue for the states in the federation. Beyond the advantages, David said that this judgement translates to more responsibilities for the state because they have to handle money laundering, data protection issues, and the black market.

Likewise, the issue of capacity, as online and offline gambling shall be regulated by the state, as declared by the court. Concerns have risen because the federal government controls cyberspace.

Fisayo thinks the concerns will raise the issue of partnership, as states must collaborate with federal agencies responsible for regulating cyberspace and even advertising.