Gambling industry regulators under the aegis of the Association of State Gaming Regulators have called for the streamling and clear definition of the roles of the federal and state regulators to ensure the viability of the industry and attract more investments.
The ASGR decried the current situation where the National Lottery Regulatory Commission engaged in a jurisdictional tussle with state regulators, thereby creating chaos in the sector including double taxation of operators, duplication of roles, ineffective oversight and unfair competition among others.
The association’s position was made known in a communiqué issued at the end a recent meeting and signed by Abiola Are, President, Lagos State and Harrison Ogara, Secretary, Enugu State.
According to the communiqué, obtainwd by TheNewsMatrics, the major problem with duplication of gaming regulatory roles at Federal and State government level has been revenue control and allocation.
It noted that while revenue generated from lottery and relative activities is supplementary and applied to ‘good causes’ projects in specific sectors – usually education, health, social and sports sector, — best practice dictates that consideration is given to geographical areas that contribute the most to lottery when the fund is disbursed.
However, the NLRC insists that all gaming operators must obtain a federal license, “which has led to a situation where operators are subject to double taxation or opt for federal license to the detriment of the state government”.
The association observed that although the Nigerian Constitution is silent on matters of lottery, gaming and gambling; it appears obvious that it is a residual matter for state governments to legislate and regulate.
“This presumption is buttressed by the Taxes and Levies (Approved List for Collection) Act 1998, which assigns responsibility for collection of pools betting, lotteries, gaming and casino taxes and levies to state governments.”
It pointed out that the same position applies to countries with similar systems of government where gaming/gambling is regulated by constituent units such as is the the case the United States, Canada and South Africa.
To buttress this point, the ASGR said that in the US, gambling is generally legal under the federal law; however, there are significant restrictions on interstate and online gambling. “Each state has an independent gaming Commission and is at liberty to regulate or prohibit any forms of gaming activities within its borders. Case in point is Utah and Hawaii where all forms of gambling are illegal. Gaming laws vary from State to State while Federal government has general oversight functions.
“In Nigeria however, gaming is regulated at both State and Federal level with no distinction of role and functions thereby causing chaos, creating loopholes, double taxation and replication of roles/responsibility which leads to distress for industry stakeholders.
“Foreign investors are also reluctant to venture into Nigeria despite huge potential due to existing chaos and confusion, the communiqué observed.
Pointing out that the federal regulator, NLRC was set up to establish and oversee the conduct of “national lottery”, the agency now arrogates the function of issuing license to multiple (potential) lottery operators to itself. This usurping of state responsibility by NLRC has been subject to various litigation between NLRC, its licensees and Lagos State.
The association also said that the federal regulator had been frustrating efforts at growing the industry as the state governments now contend with the non-compliance of federal licensees with terms & conditions of operation laid down by state government leading to unfair competition in the gaming industry, when ideally, the federal regulator should set uniform agenda for regulation of the industry which all states must implement in their jurisdictions.
It also said the NLRC have even gone further to liaise with other (federal) regulatory agencies to undermine State’s jurisdiction over gaming.
“Recently, the Corporate Affairs Commission (CAC) introduced a new practice by insisting that all companies incorporated for lottery and gaming purposes must obtain approval from NLRC before such incorporation and filing is concluded. This is tantamount to insisting that a citizen obtains visa before getting a travelling passport!
“Until recently, the Nigerian Communication Commission (NCC) insisted on federal licence as a pre-approval requirement to launch products on SMS, short code and telecoms platform. During the centenary celebration, the NLRC in conjunction with NCC prohibited the launch of SMS based lottery or activities by any telecommunication operator. The effect is huge loss of revenue that usually accrues from these activities to the State government.
“Clearly, NLRC misconstrued benefits of the gaming industry and the revenue potential for Nigeria. The Commission’s focus is to discourage the efforts of States on gaming regulation instead of creating the enabling environment required to develop the industry”, the communiqué reads in part.
The association similarly complained of NLRC’s activities that are “counterproductive and disruptive of the hitherto stable gaming industry in Lagos State, which had resulted in huge revenue losses for the state due to inability to monitor operations and revenue profile of federal licensees.”
To move the industry forward the ASGR advocated the adoption of best practice as seen in other jurisdictions with similar system of government.
It insisted that the role of NLRC as a federal lottery regulator needs to be redefined in line with global best practice. Aspects of the gaming industry need national approach and should be the focus of NLRC, it said.
“The gaming regulation model of South Africa and United State of America provide examples of the function of federal and State government in regulating gambling/gaming respectively”, it said.
It therefore called for the following measures to be emplaced:
1. Amendment of National Lottery Act to reflect the functions of the gaming regulator in a federal system of government.
2. The gaming laws (State and federal) must be updated to address universal issues concerning remote gaming, money laundering, revenue allocation and so on.
3. State government/gaming regulatory authority must derive revenue from gaming activities conducted within its jurisdiction. Revenue control and allocation must reside with each State government.
4. The responsibility for regulating all aspects and categories of gaming (lottery, betting, casino games, land-based and online) should reside in a single regulatory agency at the State level to avoid duplication of functions.
It also insited that the federal government should perform strictly oversight functions in the gaming industry by setting harmonized standards in conjunction with State governments and monitor compliance with relevant laws and regulations.
Such functions should include:
1. Provide framework and direction for gaming jurisdiction in Nigeria.
2. Set standards and identified aspects of gaming allowed or prohibited in the country.
3. Policy formulation, implementation, monitoring and review in conjunction with State regulatory agencies in the interest of the gaming industry.
4. Maintain oversight of State regulatory agencies performance to ensure norms and standards are properly applied and maintained.
5. Set standards for inter-State sale of gaming tickets for effective allocation of revenue in conjunction with State regulators.
6. Set standards for processing application for licence by State regulatory agencies to ensure uniformity. Investigate alleged contraventions by State regulators.
7. Guidelines for introduction of technology into the country and licence software, hardware provider/manufacturers in Nigeria.
On the part of states, the ASGR said thay should:
1. Accept and review applications from within the State for various aspect of gaming.
2. Make recommendation to federal gaming regulator on issues affecting the industry.
3. Determine special conditions to guide operation in the State.
4. Conduct probity on operators in the State.
5. Set standards on premises and location of the gaming outlets.
6. Enforcement of the Federal Gaming legislation and relevant State laws.
7. Determine and impose conditions of operation, fines/penalties and conduct hearings
8. Monitor all operators and remote gambling activities within the State.
9. Develop and implement Responsible Gambling policies.