Lagos Begins 5% Withholding Tax on Betting Winnings

The Lagos State Government has commenced the enforcement of a 5 per cent withholding tax on gaming payouts, directing all licensed betting operators in the state to begin immediate automatic deductions from customers’ net winnings.

The directive was issued in a public notice by the Chief Executive Officer of the Lagos State Lotteries and Gaming Authority, Mr Are Bashir, who confirmed that the policy takes immediate effect and applies to all licensed operators.

Under the new framework, the 5 per cent tax will be deducted at source before winnings are credited to players. The deducted sums will be remitted to the Lagos State Internal Revenue Service as the statutory tax authority.

Bashir stated that the measure forms part of Lagos State’s broader effort to strengthen tax compliance, transparency and accountability within the rapidly expanding gaming sector.

“All licensed gaming operators in Lagos State have now been formally directed to commence the deductions with immediate effect,” he said.

In addition to the withholding tax, players will now be required to provide their National Identification Number in line with Know Your Customer regulations, tightening identity verification and compliance controls across the sector.

The Authority clarified that deductions and remittances will be handled strictly by licensed operators, with proper documentation maintained. It added that the 5 per cent withholding tax deducted at payout will serve as a tax credit for players during their annual tax filings.

The policy has immediate financial implications for players, who will receive 5 per cent less than their net winnings at payout. For operators, the directive requires system upgrades to automate tax calculation, deduction and remittance processes.

While the move is expected to enhance revenue collection and reduce tax leakages in the sector, industry observers note that lower net payouts could dampen player engagement or push some customers towards unregulated platforms.

The enforcement marks a further tightening of oversight in the gaming industry. In October 2023, the Authority warned residents against patronising unlicensed operators and cited breaches of Section 33(3) of the Lagos State Lotteries and Gaming Authority Law 2021, reiterating its commitment to full regulatory compliance.

The latest directive signals Lagos State’s intention to formalise revenue collection in the gaming ecosystem as part of wider fiscal consolidation efforts.