Lagos Begins Enforcement of 5% Withholding Tax on Betting Winnings

The Lagos State Government has directed all licensed betting and gaming operators within the state to begin deducting a 5% withholding tax (WHT) from players’ winnings.

The directive, announced in a public notice by Are Bashir, Chief Executive Officer of the Lagos State Lotteries and Gaming Authority (LSLGA), takes immediate effect and applies to players’ net winnings.

The move marks one of the most direct tax enforcement actions yet in Nigeria’s fast-growing gaming sector.

Automatic Deduction at Source

Under the new framework, the 5% withholding tax will be deducted automatically at the point of payout, before winnings are credited to customers’ accounts.

Licensed operators are required to remit the deducted sums directly to the Lagos State Internal Revenue Service (LIRS), which serves as the state’s tax authority.

Bashir described the enforcement as part of a broader compliance drive.

“The measure forms part of Lagos’ broader drive to strengthen tax compliance, transparency, and accountability in the rapidly expanding gaming sector.”

He added:

“All licensed gaming operators in Lagos State have now been formally directed to commence the deductions with immediate effect.”

According to the notice, the withheld amount will serve as a tax credit for players, meaning it can be offset against their total tax obligations where applicable.

New KYC Requirement: NIN Now Mandatory

Alongside the tax enforcement, the LSLGA is requiring stricter identity verification.

Players must now provide their National Identification Number (NIN) in line with Know Your Customer (KYC) regulations.

Operators are expected to:

• Automate tax calculation and deduction systems

• Maintain detailed documentation of all deductions

• Ensure timely remittance to LIRS

• Strengthen customer identity verification processes

Bashir clarified that compliance responsibility rests squarely on licensed operators, who must handle deductions and reporting transparently.

What This Means for Players and Operators

The policy introduces immediate financial and operational implications across the ecosystem.

For Players

• Winnings will be reduced by 5% at payout

• The deducted amount counts as a tax credit

• NIN submission becomes compulsory

For Operators

• Backend systems must be upgraded to automate tax workflows

• Compliance and reporting requirements will increase

• Failure to comply could attract regulatory sanctions

Industry Concerns: Will It Shift Behaviour?

While the government frames the move as a transparency measure, industry observers warn of potential side effects.

Lower net payouts could discourage casual bettors or push some players toward unregulated platforms operating outside Lagos’ oversight.

If that happens, licensed operators may face engagement declines, while enforcement agencies may need to intensify monitoring of illegal platforms.

Still, the state appears focused on formalising revenue collection within a sector that has seen rapid growth in recent years.

Not the First Regulatory Warning

The latest directive builds on earlier enforcement efforts.

In October 2023, the LSLGA warned residents against patronising unlicensed gaming operators. It also issued banning orders against companies offering gambling services without proper authorisation.

The Authority cited Section 33(3) of the Lagos State Lotteries and Gaming Authority Law 2021, which prohibits operating gaming services without a valid licence.

At the time, regulators reaffirmed their commitment to tightening oversight and eliminating illegal operators from the state’s gaming market.

The Bigger Picture

The enforcement of a 5% withholding tax signals Lagos State’s intention to deepen regulatory control over gaming — not just through licensing, but through structured tax collection and data-backed oversight.

For players, the change will be visible immediately in their payout amounts.

For operators, it marks a shift toward heavier compliance obligations in a sector that regulators now consider too large to operate with loose financial reporting.

One thing is clear: Lagos is drawing firmer lines around how gaming revenue is tracked, taxed, and monitored.