Sports betting is one of the categories of permissible lotteries in Nigeria under the National Lottery Act 2005 (“NLA 2005”) and, of course, each State has its own law regulating sports betting activities within each State (e.g. the Lagos State Lotteries (Amendment) Law 2008 (“LSLL 2008”) for those seeking to operate in Lagos). There is a jurisdictional contest currently going on between Federal Government of Nigeria and the Lagos State Government over who has constitutional powers to regulate and oversee lotteries operators in Lagos State.
Whilst the NLA 2005 deals with national license for operation of lottery business, the LSLL 2004 regulates all lottery businesses operating within Lagos State (see https://lslb.lg.gov.ng/rejoinderresponse-national-lottery-regulatory-commissions-publication/ in which Lagos State Lotteries Board restated its constitutional mandate to regulate and oversee all online sports betting operators within Lagos State, notwithstanding having been licensed by the National Lottery Regulatory Commission, and blacklist those operators without the Board’s license). So, a prospective sports betting company seeking to operate in Lagos is required to obtain two licences: one by the Federal Government and the second by the Lagos State Government.
You can read about the Lagos Sports Betting Licence here.
There are three (3) stages of the application process: (1) incorporation of a sports betting company with the Corporate Affairs Commission (“CAC”), (2) the application for the Approval In Principle (“AIP”) from the National Lottery Regulatory Commission (“NLRC”) and the Lagos Lotteries Board (“LLB”), and (3) the application of the Final License, also from the NLRC and the LLB.
It is important to state that incorporation may not be fully completed unless the AIP is granted by the NLRC. So, the procedure is to reserve the proposed sports betting company’s name with CAC and proceed to obtain the AIP from the NLRC before completing the incorporation with CAC and, thereafter, return to the NLRC and, also this time, the LLB for Final Licenses to commence sports betting business. The LLB’s official website, under its FAQ on “Who can apply for gaming license?”, states that “A company duly incorporated in Nigeria that satisfies the statutory conditions and requirements for the interested gaming license category.”
1. Incorporation of the Sports Betting Company with CAC: A prospective sports betting company is required to be incorporated by the CAC. But before the incorporation, the applicants would need to obtain the AIP from the NLRC, which is a precondition for incorporation.
(i) Incorporation Requirements: A sports betting company must have a minimum of paid up share capital of 30,000,000 fully subscribed by the shareholders (although the LSLB requires a lesser share capital of 20,000,000, it is advisable to register the company with 3om share capital). The other requirements for the registration include:
- Two (2) proposed names for the sports betting company,
- The proposed registered address of the company: this may be virtual address. At Koriat & Co., we offer our offices as virtual address for client’s use as registered address and mailing purposes;
- E-mail of the sports betting company,
- Particulars of subscribers/shareholders, directors and company secretary: the names, particulars, curriculum vitae, government-issued means of identification and specimen of signatures of the subscribers/shareholders, the directors and the company secretary (Koriat & Co. offers support services as company secretary); and the number of shares to be allotted to each shareholder.
Please note that persons below the age of 18 years or persons holding public office or working in the civil service are prohibited from being directors of a sports betting company. Public officers or civil servants cannot be shareholders of sports betting company in Nigeria.
Please note also that directors and shareholders can hide their personal information from the public members who may later conduct search into the company using the CAC online portal. This costs N25,000 (about US$50) per person.
Finally, please note that where a foreigner with a Nigerian address is a director, proof of his or her Combined Expatriate Residence Permit and aliens Card (CERPAC) must be uploaded into the CAC portal. CERPAC is obtained from the Nigerian Immigration Service (NIS) for $2000.
(ii) Incorporation Costs: The registration cost/expense is about N430,000 (about US$860). The foregoing entails the CAC Registration Fee of N155,000, i.e. about US$210, (at N10,000 to represent the initial 1million of the 30 million share capital and N5,000 for every subsequent 1million of the remaining 29 million share capital, i.e. 5,000 multiplied by 29 plus N10,000), Stamp duty of N225,000 payable on the N30 million share capital at 0.75% (charged by the Federal Inland Revenue Service). We estimate the sum of N50,000 for courier costs, telephone calls and internet data.
As already stated above, where a foreigner with a Nigerian address is a director, a CERPAC card obtainable at $2,000 must be uploaded into the CAC portal.
Please note, also, that if the directors and shareholders desire to hide their personal information (other than names) from the public record, then each of the interested person will pay N25,000 (about US$50).
2. Application for AIP to Set up a Sports Betting Company: the promoters are expected to apply to the NLRC for AIP immediately the company’s name has been reserved with the CAC but where the company has already been registered, different considerations apply.
(i) Application for AIP to NLRC By a New Company: Where the applicant company is a new company, an AIP must be sought and obtained from the NLRC before completing its incorporation with CAC. The requirements for application for AIP to the NLRC are as follows:
(a) A duly completed application form in capital letters (except the signature and email address);
(b) An application letter stating the intention of the applicant and seeking approval to register a sports betting company, addressed to the Director General of NLRC, Plot 640, Cadastral Zone B4, Musa Yar’Adua Way, Jabi District, FCT, Abuja, Nigeria;
(c) Copy of Name Reservation Approval issued by the CAC;
(d) Proof of payment of N10,000 (about US$20) in favour of the NLRC through Remita platform; and
(e) A business proposal or feasibility study report detailing the general business information, operational information, financial information and technical information, covering specifically the following:
- The proposed sports betting game events (live betting, sportsbook, virtual games and so on) and comprehensive modalities for each game events;
- The proposed investment in the sports betting scheme;
- The address of administrative office and locations across Nigeria;
- Source of funding and financial plans (equity, foreign investment, loans and applicable terms of investment);
- Five (5) year financial projection for the betting scheme (profit and loss account showing investment, sales/income, winnings/prize money, tax obligation, operating expenses, third party suppliers, etc.);
- Details of technical and payment solution providers, partners, telecoms providers and suppliers (web developer, odds providers, virtual providers, if applicable, hosting providers (whether self-hosting or cloud hosting), database/back up service providers, manufacturer of hardware and software technologies, servers, decoders and terminals, etc.);
- Security system (information on types, cloud, firewalls, routers and security features, redundancy implementation (where applicable);
- Documentation on process and system quality assurance;
- Architectural representation of technical operation flow for the sports betting scheme;
- Software certification from approved and recognized testing labs;
- Proposed brand, colour or logo;
- Proposed Organizational Structure.
(f) Proposed Service Level Agreement, Partnership/Joint Venture with providers and suppliers. Please note that all third-party agreements/contracts will be subject to the NLRC’s approval.
(ii) Costs of the NLRC’s AIP: The NLRC charges N10,000 (about US$20) to process the AIP. The cost of the Feasibility Study Report is between N800,000 (US$1,600) to N1,000,000 (US$2,000). Other costs are associated with the drafting of the proposed service level agreement, partnership/joint venture agreement and virtual office address, if necessary.
Upon the receipt of the above, the NLRC may invite the applicants to make presentation to the NLRC. Thereafter, a review of the application will be done by the NLRC, usually for about 10 working days. Thereafter, the NLRC may grant an AIP with which the applicant company is expected to complete its incorporation at the CAC.
(iii) Application for Provisional Approval: upon incorporation of the sports betting company by the CAC, an application for provisional approval is then made to the NLRC. The grant of the provisional approval is subject to the following conditions:
(a.) Payment of Application Fee for Sports Betting of N2,000,000 (US$4,000);
(b.) Payment of Permit Fee of N50,000,000 (US$100,000) for five (5) years.
(c.) Bank guarantee of at least N25,000,000 (about $50,000) of not less than 1-year validity;
(d.) Submission of incorporation documents (certificate of incorporation, CAC Application Form 1.1 or other CAC Form showing the list and particulars of shareholders and directors);
(e.) Evidence of trademark registration (if any) with the Federal Ministry of Trade and Investment;
(f.) Satisfactory inspection of the company’s technical and operational facilities including administrative office and data center(s);
(g.) Connection to the NLRC’s monitoring and reporting platform;
(h.) Website advert materials (if any) in hard and soft copy including picture frame of the sports betting company’s trade name or logo (Frame size is 16/12);
(i.) Companies with foreign shareholders and directors are required to provide business quota, residence/work permit issued by the Nigerian Immigration Service (“NIS”);
(j.) Investment certificate from Nigerian Investment Promotions Commission (“NIPC”);
(k.) Execution of Terms and Conditions of operation of Sports Betting;
(l.) Copies of duly executed Service Level Agreement with third-party providers;
(m.) Signed undertaking from all technical providers;
(n.) Evidence of domain name registration with (.ng);
(o.) Evidence of registration with the Special Control Unit on Money Laundering (SCUML);
(p.) Profiles, addresses, phone numbers, occupation, nationality of all Directors, shareholders and key personnel (with their respective means of identification, qualifications and relevant gaming industry experiences) including Company Secretary, Compliance Officer, Accountant, ICT Manager, Operations Manager, Agency Manager(s) and Customer Care Manager;
(q.) Evidence of tax payment of the directors and key management staff for the preceding year (for existing company, not for newly incorporated company);
(r.) Copy of the Organogram;
(s.) Evidence of filing Annual Returns to date with the CAC (for existing company only, not for newly incorporated company);
(t.) Contact details of key personnel in charge of the sports betting game;
Please Note: Applicants will be notified of the status (approved or rejected) of the application at the end of the review period. Successful applicants will proceed to the licensing stage with the issuance of a Provisional Approval. A Provisional Approval, if granted, will last for 90 days during which the above conditions stated therein must be fulfilled.
(iv) Inspection by the NLRC: NLRC delegates will conduct inspection of the applicant’s facilities –server centre, providers, head office, model outlets— to ensure compliance with approved standards in sports betting. During the approval period, the applicant may be required to submit additional documents in support of the proposed sports betting operation, fulfil inspection requirements and pay statutory fee(s) in part or full.
(v) Final License: Whenever the sports betting company has fulfilled the conditions for the AIP, a letter should be addressed to the NLRC advising the Commission of the compliance and seeking the grant of the final license. Final License is issued by the NLRC upon confirmation that the conditions of the AIP have been fulfilled as well as the applicants’ proof of following:
- Evidence of the sports betting company’s connection to the NLRC transaction reporting and monitoring platform within 14 days of commencing business;
- Payment of 5% of monthly gross proceeds on or before the 5th day of the succeeding month as follows: (i) 2% of gross proceeds as administration & monitoring fee payable to the NLRC, (ii) 3% of gross proceeds payable to the National Lottery Trust Fund;
- Submission of monthly reconciliation log or report on transactions in the approved format; and
- Satisfactory system audit by the NLRC, usually on a quarterly basis.
The NLRC will upload the names and contact details of the successful applicants on the NLRC’s website. Sports Betting companies are not allowed to modify or alter or amend the particulars or modalities of an approved sports betting scheme without prior approval of the NLRC.
- Application for Online Sports Betting Permit from the Lagos State Lottery Board (“LSLB”): A sports betting company seeking to operate online in Lagos would be required to obtain operational permit from the Lagos State Lottery Board, notwithstanding the sports betting license of the NLRC. Unlike the NLRC, the permit from the LSLB can be applied for after incorporation of the sports betting company. The process of obtaining the LSLB’s sports betting permit entails the submission of the following requirements:
i. Application letter
ii. Non-refundable application fee of N500,000 (US$1,000);
iii. Documentary Evidence of Incorporation (such as certificate of incorporation, memorandum and articles of association, proof of the company’s 20 million share capital fully subscribed, CAC documents showing details of directors and registered address and administrative office of the sports betting company);
iv. Detailed business plan or feasibility study report on the online sports betting scheme covering the following information:
Information about Business Structure
- Address of the registered office, branches and planned outlets, this must be lock-up shops –kiosks and mobile vendors are not allowed;
- Names, contact address and profiles directors of the sports betting company;
- Tax Clearance Certificate of directors in the last three (3) years;
- Description of operations and management structure;
- A sports betting industry analysis that clearly demonstrates an understanding of the sports betting industry. Please note that the analysis must include names of major players and market share.
- Marketing and distribution plan;
Information about the Proposed Sports Betting Operation
- Details of planned games;
- Relevant sport activity;
- Approximate odds to be used;
- Prizes and price structure;
- Number and frequency of sports/games;
- Operators’ game rules and participants’ Code of Practice;
Information about the Financial Projections
- Management account of your organization;
- Company’s bank statement for the one (1) year in support of financial plans;
- Five years projected profit and loss account, balance sheet, cash flow analysis (this should capture for the annual license fee of N50,000,000/US$100,000 for the first year, annual renewal fee of N10,000,000/US$20,000 and projected monthly profit and expenditures including monthly gaming tax of 2.5% of sales revenue)
- Nature and extent of financing and capital investment (please indicate if foreign investment is involved in the business and if any, terms of the investment);
- Capital budgets showing set up costs and assets schedule of over 5 years.
v. Detailed information about the applicant’s bookmaker, betting sites and technical consultants;
vi. Detailed information on proposed technical topography including a schematic diagram clearly illustrating the technical operational flow covering the following:
General information
- Architectural diagram clearly illustrating the technical operational flow;
- Proposed platform –self host or cloud based;
- If cloud based, the contact information of the hosting company;
Hardware Information
- Detailed information on the type of servers to be used;
- Detailed information on firewall, routers etc;
- Redundancy implementation (if any);
Software
- Operating systems specifications;
- Database application specifications.
vii. Process and System Quality Assurance.
Please Note: The LSLB will review every application for suitability of the applicant for the license. As part of the application process, the LSLB will require the applicants to make a presentation before the LSLB. Where the applicant satisfactorily fulfils all the pre-approval requirements, an AIP will be granted for 90 days. Like the NLRC’s AIP, the LSLB’s AIP is a temporary license usually granted with conditions. Whenever the sports betting company has fulfilled the conditions for the AIP, a letter should be addressed to the LSLB advising the Board of the compliance and seeking the grant of the substantive license. The substantive license will thereafter be issued only upon fulfillment of all the conditions highlighted in the AIP.
4. Timelines for Completion: There are different timelines for completing the stages of the process of incorporation and licensing of a sports betting company in Nigeria. The incorporation of a company by the CAC usually takes one (1) day. The review of the pre-license application and the application for provisional approval by the NLR, usually takes about 10 working days for each stage. The NLRC’s Provisional Approval, if granted, has a lifespan of 90 days during which all the conditions of its grant must be fulfilled. Similar timelines are applicable to the LSLB, as shown above. Apart from drafting and documentation, processing certified true copy of incorporation documents, registration of trademark which have varying timelines, the entire process can be completed between 10 weeks and 12 weeks.
Also, you can read about the Lagos Sports Betting Licence here.
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The above article is for information only and NOT as legal advice. Interested applicants who require clarification or seek guidance on the process of incorporating and processing sports betting license in Nigeria may contact Koriat & Co. at 3rd 191, Igbosere Road, Lagos Island, Lagos or via Email admin@koriatlaw.com or Telephone: 09067842241.
