The Lagos State Government has introduced a 5% withholding tax (WHT) on gaming winnings, effective immediately, as part of broader efforts to enhance compliance and regulatory oversight in Nigeria’s fast-growing betting sector.

Automatic Deduction at Source

Under the new framework, the 5% tax will be automatically deducted from net winnings at the point of payout on licensed gaming platforms operating within Lagos State.

Operators are required to remit the deducted funds directly to the Lagos State Internal Revenue Service (LIRS), the state’s statutory tax authority.

Authorities stated that the measure aims to:

  • Improve tax collection efficiency
  • Increase transparency in gaming transactions
  • Strengthen regulatory accountability

Players will receive their winnings after the deduction, with the withheld amount recorded as a tax credit that may be applied to their overall tax obligations where applicable.

Regulatory Push Amid Market Expansion

Nigeria’s gaming industry has experienced rapid growth, driven by:

  • Rising mobile penetration
  • Expansion of digital payment systems
  • Increased participation in sports betting

The sector reportedly reached approximately £2.85 billion in 2025, with major operators active in the country including Betway, Bet9ja, Nairabet and Betano.

Despite strong growth, authorities have intensified enforcement actions. Recently, Bet9ja faced a court order in Enugu related to alleged overdue tax payments and regulatory compliance issues, which the company has disputed.

Official Statement

Bashir Are, CEO of the Lagos State Lotteries and Gaming Authority, confirmed that all licensed operators have been formally directed to begin deductions immediately.

He described the measure as part of Lagos State’s broader strategy to reinforce tax compliance and governance standards within the expanding gaming ecosystem.

Market Implications

The introduction of the withholding tax signals a tightening regulatory approach in one of Africa’s largest and most dynamic betting markets.

For operators, the change means:

  • Updated payout systems to reflect automatic deductions
  • Increased reporting and remittance obligations
  • Greater regulatory scrutiny

For players, while payouts will be reduced by 5%, the deducted amount functions as a formal tax credit, aligning gaming winnings with broader personal tax frameworks.

As Nigeria’s gaming market continues to expand, Lagos State’s move highlights the growing emphasis on structured taxation and regulatory oversight across Africa’s most populous country.