Online Sports Betting – Requirements for Securing A Digital Sports Betting License in Nigeria

Online Sports Betting – Requirements for Securing A Digital Sports Betting License in Nigeria

Online betting is currently witnessing a huge boom as a major Fintech opportunity in Nigeria, partly motivated by the current economic situation leading to increased efforts on the art of many Nigerians to seek passive income, and the attractive idea of making money from truly legitimate passion for sports like Football shared by an overwhelming majority of people in the country.

Sport betting itself is the activity of predicting sports results and placing a wager on the outcome. In Nigeria, sports betting has been described alongside betting businesses like Land-based Casinos as legal under Nigerian Law which on the other hand describes as illegal betting games of chance which usually by deliberate design are not favorable to the player, which can be described as plain racketeering.

Digital Sports betting which is the core focus of this article is regulated at the Federal level by the National Lottery Regulatory Commission (NLRC) established through the National Lottery Act and is charged with administering the provisions of the National Lottery Regulations 2007 while at the state level in places like Lagos state Online Sports betting is governed by the Lagos State Lotteries and Gaming Authority (LSLGA) established by the Lagos State Lottery Law (as amended).

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This article aims to shed more light in a most summarized and basic manner on what you really need to know about getting a Digital Sports Betting license.

Due to disputes between the Federal and State governments over whether the Federal government has jurisdiction over betting licenses, it is very advisable to seek Digital Betting licenses from the NLRC as well as the LSLGA. 

The NLRC usually issues 3 classes of licenses which are Lottery licenses, Sports Betting licenses, and Promotional licenses.

To secure a Federal Digital Sports Betting license from the NLRC, you need to have the following:-

– Preferably, an Online Betting company registered with the Corporate Affairs Commission. The minimum share capital requirement for Sports Betting companies is 30 Million Naira while the minimum share capital requirement for a lottery betting company is 5million Naira (you cannot engage in Online Sports Betting as a lottery company);

– While at the point of applying for a Federal/National Sports Betting license grants from the NLRC, you must not have a registered company, you must attach to your application a copy of your Company name reservation approval by the Corporate Affairs Commission and evidence of the payment of a sum of 10,000.00 Naira to the NLRC;

– Applying for a National license is broken down into an Application stage, a Provisional Approval (Approval-in-Principle ) stage, and a Post-licensing stage;

– An NLRC  non-refundable application fee of 2million Naira payable to the NLRC;

– A one-time license fee of 100 million Naira(a 50% concession on this fee is possible where the company is a member of the Association of Nigerian Bookmakers);

–  A completed NLRC application form;

– Evidence of Domain name registration with a country code top level Domain label for Nigeria;

– Evidence of Trademark Registration ( Trademarks are the company’s brand symbols that include logos, slogans, catchphrases etc.);

– Evidence of SCUML registration as well as a set-up AML/CFT compliance framework. SCUML stands for the Special Control Unit on Money-laundering and is the government agency tasked with receiving compliance returns from Financial Institutions (FIs) and Designated Non-Financial Institutions (DNFIs) which includes Fintech players like Online Sports Betting companies;

– Particulars of directors and key personnel of the betting company (please note that people under the age of 18 are not allowed to be directors in Betting companies);

– A 5 year financial projection and Organization progression/growth plan for the Betting company;

– Details of the company’s planned Sports Betting games along details of the company’s participation terms and conditions for bettors, its marketing and distribution plans and a demonstration of Sports Betting Industry analysis capabilities;

– A detailed profile of the company’s Technical Service Providers/Partners and Telecommunications partners as well as copies of all JV agreements and/or SLAs signed with Technical partners and proof of software certification from recognized Tech testing labs;

– Where the company has foreign participation/ownership, there must be presented relevant immigration documents and a Certificate of Capital Importation from the Nigerian Investment Promotion Council;

– A Bank guarantee of 25 Million Naira valid for 1 year(at the temporary licensing stage);

– Connection of the Betting platform to the NLRC monitoring and reporting framework.

Temporary license grants last 90 days and at the Post-licensing stage or in the course of business operations, Betting companies are required to remit along with monthly update returns before the 10th of the next month a 3% tax on monthly sales turnover to the NLRC, 2% of this going to the National Lottery Trust fund .

NLRC licenses are valid for 10 years and do not have renewal fees, but renewal is at the discretion of the presidency subject to the recommendation of the NLRC.

Also, National Sports Betting companies are expected to establish a Prize Fund Account which will hold at least 50% of the proceeds from any lottery strictly for the payment of prizes.

STATE SPORT BETTING LICENSES :- For the purpose of this article we’ll be dealing with the procedure and requirements involved in getting an Online Sports Betting (OSB) license from the state agency regulating the business of Sports Betting, in this case the Lagos State Lotteries and Gaming Authority(LSLGA) which is a creation of the Lagos State Lottery Law (as amended). LSLGA licenses do not come with Bank guarantee requirements unlike NLRC license applications.

The requirements for an OSB license from the LSLGA are :-

– Application letters with attached Letters of Intent sent to the LSLGA which are usually reviewed in 10-15 working days;

– A minimum share capital of 20 million Naira;

– Incorporation documents of the applicant company;

– A non-refundable application fee of 500,000.00 Naira payable to the LSLGA;

– A license fee of 50 million Naira, with a renewal fee (renewal itself bring at the discretion of the LSLGA) of 10 million Naira payable annually along with a 2.5% monthly tax on sales revenue;

– Details of its proposed platform (if it is self-hosted or cloud-based and details of its hosting company of its the latter);

– A detailed proposal on the Online Betting scheme revealing vital particulars of the company’s key personnel(with 3-year Tax receipts where applicable) and its Business plan along with its financial projections;

– Detailed information about the company’s Technical operation flow and Technical partners.

Please note that Sports Betting companies in Nigeria CANNOT be 100% Foreign-owned, as a result at least 15% of the company’s controlling participation must be owned by Nigerians. Also, another way of going round the rather heavy capital requirements of getting a Digital Betting license is to simply set up an Online Betting Shop or a chain of Online Betting Agency shops by virtue of a franchise agreement.

SPORTS BETTING COMPLIANCE REQUIREMENTS :- Online Sports Betting companies have an extended Regulatory Compliance framework covering them that includes :-

  1. The NLRC/LSLGA;
  1. AML/CFT/KYC compliance filings to The Special Control Unit on Money-laundering as well as the Nigerian Financial Intelligence Unit (NFIU) among others;
  1. The National Office for Technology Acquisition and Promotion (NOTAP);
  1. The Nigerian Investment Promotion Commission (NIPC);
  1. Betting advertisement compliance with the Advertising Practitioners Council of Nigeria (APCON);
  1. The National Information Technology Development Agency (NITDA);
  1. The Federal and State Inland Revenue Services.

Consequently, it’s very advisable when setting up a licensed Digital Betting platform to have efficient Legal services by your side at every step of Licensing and post-licensing.

It is hoped that a basic understanding of how to participate in the Nigerian Online Betting Industry will be acquired from a proper processing of this article. 

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