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Nigeria gets tough on offshore gambling operators

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Director-general of the Nigerian Lottery Regulatory Commission, Lanre Gbajabiamila

The West African country of Nigeria is the continent’s largest economy, primarily due to its petroleum production and export industries, and is well-known for its long-time love affair with gambling of all kinds. Many in the gambling industry believe that Nigeria has the potential to become the continent’s largest online betting market.

Due to its economic leadership in Africa, what happens in Naija may affect the financial state of the rest of the continent. Yet, despite the apparent success of both online and offline gambling enterprises in Nigeria (with many benefits to the state), government officials are now looking to seriously crack down on offshore and unregulated gambling operators.

Cracking down on unregulated sites
The unprecedented growth of the gambling industry in Nigeria has proved to be the largest obstacle for authorities to properly govern the actions of the operators and players within the country.

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When in December of 2019, the state of Lagos began granting licenses for online sports betting, Nigerians were able to start playing at offshore online casinos for decades without fear of prosecution.

Unfortunately, not all government agencies were kept apprised of the swift growth in players playing in offshore establishments, causing a backlash of issues such as capital flight, tax evasion, the non-disclosure of financial transactions and movements of illicit funds.

The collaboration
Recently, the Nigerian Lottery Regulatory Commission (NLRC) sought out the country’s Financial Intelligence Unit (NFIU) in order to form a cooperative task force to restrict Nigerian gamblers from playing on unregulated sites.

Earlier in 2020, the NLRC had partnered with the country’s Corporate Affairs Commission (CAC) to fight “unscrupulous companies” in the country’s gambling industry. Although these organizations have previously worked together to scrutinise operators, they’re now ramping up their efforts.

In a statement, NLRC director-general Lanre Gbajabiamila said, “Our alliance and mutual cooperation are now more imperative, and as responsible agencies, it is our duty to keep pace with the dynamic and growing complexity of the modern lottery industry which features multi-channel availability, the electronic delivery of play, and complex financial transactions.”

It will be interesting to see how this new partnership affects the ongoing reorganization of federal and state cooperation in regulating this ever-growing and ever-changing industry.

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Australia as a case study
We expect that Nigeria will continue its aggressive enforcement against offshore operators. Nigerian officials, however, should be wary that many countries have tried this in the past.

Australia is a perfect case-in-point. When the Australian government regulators decided to crack down, they began by implementing site blocking at an ISP (internet service provider) level. This did little to stop the online casinos from simply bypassing the attempted blocks and then it’s back to business as usual for the offshore operators.

For this reason, the two federal departments in cooperation with the state regulators must come up with better ways of combating the unlicensed operators than have been tried in the past.

Gambling in Nigeria
The state of gambling in Nigeria is a complex beast. There’s no doubt that in any nation, the gambling industry does provide significant benefits in the form of jobs, revenue to healthcare and education, and, of course, general entertainment for the population.

For many years, Nigeria’s offline sports betting and gambling industry saw significant year-to-year growth, with its online gambling counterpart gaining strength in the last decade or so with an increase in the country’s population and widespread access to the internet. In 2018, it was reported that Nigeria was the second-largest online betting market in Africa, with gross gaming revenues of $58 million for that year.

The downsides, however, can be just as significant without proper regulation. Federal and state regulatory agencies have never been on the same page about current laws, licensing, or legal procedures for dealing with gambling entities.

Corruption
Public officials in Nigeria do have good reason to fear for the future of unregulated gambling in their country. Concerns have surfaced recently about the uses of illicit money generated by illegal gambling in Nigeria. These include things like money laundering, terrorism financing, “financial leakages” to the unlicensed sector, and other issues that the new regulations are aiming to stamp out.

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Recently, the NLRC and the NFIU signed a Memorandum of Understanding that contains their plans to combat these harmful forms of corruption within the nation.

Ambiguous legal status
Confusingly, gambling is currently both legal and illegal in Nigeria, complicating the status of regulated and non-regulated operators. Depending on the type of gambling, the status of the game, operation, or casino could be deemed legal or outside the law.

It’s not surprising then, that many Nigerian government officials have called for new laws to clarify the status of gambling operators in the country. Only time will tell whether the ongoing struggle between federal agencies and state lottery boards issuing licenses and blacklisting operators will solve the country’s current problems or only further muddy the issue going forward.

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