Online bettors in Lagos will now see a slice of every payout diverted to the tax authorities.
The Lagos State Lotteries and Gaming Authority confirmed that a 5% withholding tax on net winnings has taken immediate effect across all Lagos-licensed platforms. The deduction will be applied automatically at the point of payout and transferred directly to the Lagos State Internal Revenue Service.
CEO Bashir Are announced the move in a public notice, framing the tax as part of a broader effort to tighten fiscal compliance in the state’s expanding online gambling market.
According to the regulator, the measure is designed to improve transparency, strengthen accountability and ensure that gaming activity contributes more visibly to public revenue.
Automatic deduction model
The withholding mechanism means players will not be required to file separate declarations for betting profits. Instead, operators must deduct the 5% from net winnings before funds are credited to customer accounts.
While similar tax models exist in other jurisdictions, Africa’s gambling sector has been particularly sensitive to rapid tax adjustments.
In December, Africa iGaming Alliance CEO Peter Kesitilwe described tax volatility as one of the most significant compliance challenges facing operators on the continent. He warned that abrupt increases in withholding rates or shifts toward turnover-based taxation could distort pricing and push players toward offshore or unregulated platforms.
Lagos now becomes one of the more assertive state regulators in Nigeria on direct player-level taxation.
Regulatory patchwork continues
The move also unfolds against a complex national backdrop.
Nigeria’s President Bola Ahmed Tinubu declined to sign the proposed Central Gaming Bill in December, effectively halting efforts to centralise gambling oversight under a single federal authority.
The decision reinforced the 2024 Supreme Court ruling that gambling regulation falls under state jurisdiction. As a result, individual states, including Lagos, retain the power to set licensing conditions and tax frameworks independently.
Speaking earlier this year, Bashir Are signalled that Lagos intends to position itself as a business-friendly regulator despite the fragmented landscape. He has previously argued that states must balance revenue generation with maintaining an attractive operating environment for licensed platforms.
Balancing revenue and channelisation
The new withholding tax may test that balance.
Supporters argue the measure formalises revenue collection in a fast-growing digital sector. Critics may point to the risk that additional player-level deductions could affect competitiveness, particularly in a market where offshore operators remain accessible.
For now, the 5% deduction is in force, and operators licensed in Lagos must comply immediately. Whether other Nigerian states follow suit could determine whether this becomes a local adjustment or the beginning of a broader tax shift in Africa’s largest gambling market.