The deduction will be applied automatically at the point of payout and transferred directly to the Lagos State Internal Revenue Service.

Automatic deduction on net winnings

The announcement was made by Bashir Are, Chief Executive of the Lagos State Lotteries and Gaming Authority, through a public notice outlining the new requirement.

According to the regulator, the tax applies specifically to net winnings rather than total stakes or turnover. Licensed operators are responsible for implementing the deduction system and ensuring remittance to state tax authorities.

State officials framed the measure as part of a broader initiative to improve tax compliance, transparency and accountability within Lagos’ rapidly expanding gaming sector.

Industry concerns over tax instability

The introduction of the withholding tax comes amid wider debate about regulatory and fiscal stability across African gambling markets.

Industry stakeholders have repeatedly warned that abrupt tax changes can create operational uncertainty and undermine licensed operators. Sudden shifts toward higher withholding rates or new levies may reduce competitiveness and potentially push customers toward unregulated platforms.

The African iGaming Alliance previously identified tax volatility as one of the main compliance challenges facing the continent’s regulated markets, arguing that inconsistent fiscal frameworks can distort pricing structures and discourage long-term investment.

Ongoing regulatory fragmentation in Nigeria

The tax development also unfolds against a backdrop of continued regulatory fragmentation in Nigeria.

In December, President Bola Ahmed Tinubu declined to sign the proposed Central Gaming Bill, legislation that would have centralised gambling oversight under a single national regulator. The decision preserved the authority of individual states to regulate gaming activities within their jurisdictions.

As a result, regulatory responsibility remains decentralised, with states such as Lagos maintaining independent oversight of licensing, compliance and taxation.

Lagos positions itself as regulatory leader

Despite the introduction of the new withholding tax, Lagos officials have continued to position the state as a business-friendly regulatory environment.

Regulators have previously emphasised transparency, streamlined compliance processes and cooperation with financial institutions as part of efforts to attract and retain operators. With federal consolidation off the table for now, Lagos is expected to continue shaping its own regulatory and fiscal framework in a bid to balance revenue generation with market competitiveness.
Sources: IGB