A Supreme Court ruling has thrown the lottery landscape in Nigeria into disarray, handing control to the states and creating a regulatory patchwork that could be a boon or a burden for the booming online betting industry.
In a November 2024 landmark judgment, the Nigerian Supreme Court, in a case involving the Attorneys General of Lagos State and 21 other states against the Attorney General of the Federation and 15 others, redefined the regulatory landscape of lotteries. The court, flexing its original jurisdiction, ruled that the power to regulate lotteries resides not with the National Assembly, but with the individual State Houses of Assembly. This decision, while lauded by some as a victory for federalism, has left the online gaming sector in a state of flux.
The crux of the matter lay in the interpretation of Nigeria’s constitution. The plaintiffs successfully argued that lotteries, not being explicitly mentioned in the Exclusive or Concurrent Legislative Lists, fall under the residual powers of the states. The defendants’ argument that lotteries fell under “trade and commerce” was dismissed, with the court drawing inspiration from Indian jurisprudence, where lotteries are considered gambling and thus a state prerogative. One might be tempted to suggest that the Supreme Court’s reliance on foreign legal interpretations implies a certain intellectual humility, or perhaps a lack of indigenous legal creativity, depending on one’s perspective.
The immediate consequence of this ruling is that the National Lottery Act (as amended) is now deemed unconstitutional in the plaintiff states, although it retains authority in the Federal Capital Territory (FCT), Abuja. This leaves a curious situation where the same lottery operator might need two licenses: one from the NLRC for the FCT, and another from the specific state they wish to operate in. A bureaucratic two-step, if you will.
For online gaming platforms like 1xbet, Bet9ja, NairaBet, SportyBet, SureBet 247, and BetKing, which have witnessed explosive growth in Nigeria, this ruling presents a complex challenge. With over 65 million Nigerians participating in online gaming, spending an average of USD 15 daily and placing an estimated 14 million bets daily, the stakes are high. These platforms, which often operate across multiple states, now face the daunting task of navigating a potential maze of 37 different regulatory frameworks. One can almost picture the legal teams rubbing their hands with glee at the prospect of billable hours.
The court’s decision, while decisive on traditional lotteries, remained conspicuously silent on the booming online gaming or betting sector in Nigeria. This regulatory vacuum has created both anxiety and opportunity. States now have the power to craft their own laws for online gaming, potentially leading to a fragmented market or, optimistically, a diverse and innovative regulatory landscape. Whether this will lead to a race to the bottom in terms of tax rates, or a coordinated approach to responsible gambling, remains to be seen.
This decentralized approach to lottery regulation mirrors systems in the United States and India, where states hold primary control. This contrasts sharply with countries like the UK, South Africa, and Canada, where national governments take the lead. While some may praise this as true federalism, others might lament the potential for regulatory inconsistencies and increased compliance costs for operators.
The Supreme Court’s ruling in Nigeria, while clarifying the division of powers, has inadvertently created a new set of challenges for the online gaming and betting industry. The onus now falls on state governments to develop clear, consistent, and effective regulatory frameworks. Failure to do so could stifle the growth of this dynamic sector and deprive states of much-needed revenue. The future of online gaming in Nigeria now rests in the hands of 37 different legislatures, each with its own priorities and, dare one say, perhaps, its own level of regulatory expertise. Only time will tell if this grand experiment in federalism will pay off, or if it will simply create a 37-headed regulatory monster.