The Lagos State Government has introduced a 5% withholding tax (WHT) on gaming payouts. All licensed betting companies in the state now required to automatically deduct this tax from customers’ winnings, effective immediately.
Key Announcement
The Chief Executive Officer of the Lagos State Lotteries and Gaming Authority (LSLGA), Mr. Are Bashir, issued a public notice confirming the policy’s immediate implementation. The tax applies to players’ net winnings and aligns with existing Nigerian tax laws.
Compliance Requirements
Mr. Bashir directed all licensed gaming operators in Lagos to adhere to the new tax framework without delay. The 5% gaming payouts tax be deduct at the point of payout before winnings credited to players. The deducted amount must then be remitted to the Lagos State Internal Revenue Service (LIRS), the statutory tax authority.
He explained:
“This measure is part of Lagos State’s broader efforts to enhance tax compliance, transparency, and accountability in the rapidly growing gaming sector.”
Additionally, players now required to provide their National Identification Number (NIN) as part of Know Your Customer (KYC) regulations. Licensed operators will handle all deductions and remittances, ensuring proper documentation for transparency. The deducted tax will also serve as a tax credit for players in their overall tax filings.
“All licensed gaming operators in Lagos State have formally instructed to begin these deductions immediately,” Bashir added.
Implications for the Gaming Industry
The new tax policy and stricter KYC requirements will have several effects on the gaming sector:
- Reduced Payouts: Players will receive 5% less than their net winnings due to the tax deduction.
- Tax Credits: The deducted tax can be use as a credit in players’ overall tax filings.
- Operational Adjustments: Gaming operators must upgrade their systems to automate tax calculations, deductions, and remittances.
- Improved Compliance: The policy aims to reduce tax evasion and increase transparency in the gaming industry.
However, there are concerns that lower payouts might discourage some players or drive them to unregulated platforms, potentially impacting the revenue of licensed operators.
Broader Context
This move reflects the Lagos State Government’s commitment to tightening regulations and formalizing revenue collection in the gaming sector. In October 2023, the LSLGA warned residents against using unlicensed gaming platforms and issued bans on operators without proper authorization. Operating without a license violates Section 33(3) of the Lagos State Lotteries and Gaming Authority Law 2021. The Authority has reaffirmed its dedication to enforcing compliance across the sector.
