Lagos enforces 5% withholding tax on gaming winnings

THE Lagos State government has officially rolled out a five percent withholding tax (WHT) on gaming winnings, marking a significant regulatory step in the oversight of the state’s rapidly growing betting and gaming industry.

The new tax regime was announced in a newspaper publication on Thursday by Chief Executive Officer of the state gaming authority, Are Bashir. He explained that the decision aligns with extant tax laws and regulatory provisions governing gaming activities in Lagos State.

Under the directive, the five percent withholding tax will be applied strictly to net winnings derived from licensed gaming platforms operating within the state. The deduction is to be effected at source, meaning it will be automatically applied at the point of payout before players receive their winnings.

Mr Bashir stated that all licensed gaming operators have been formally instructed to begin immediate implementation of the policy. According to him, compliance is not optional, as the directive is rooted in statutory tax obligations.

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“With the introduction of this framework, five percent of qualifying gaming winnings will be deducted upfront prior to disbursement to players,” he said. “The deducted sums will subsequently be remitted to the Lagos State Internal Revenue Service (LIRS), which is the legally recognised tax authority responsible for administering and collecting taxes on behalf of the state.”

The state government described the measure as part of a broader fiscal strategy aimed at strengthening tax compliance mechanisms within the gaming ecosystem. Authorities noted that the gaming sector has witnessed rapid expansion in recent years, increasing the need for tighter oversight, improved revenue capture, and enhanced accountability.

Officials also emphasised that the policy is designed to create a more transparent system where winnings, deductions, and remittances are properly documented. By deducting tax at source, the government seeks to reduce potential leakages and ensure that due taxes are collected efficiently.

In addition to the withholding tax framework, players will now be required to provide their National Identification Number (NIN) as part of know-your-customer (KYC) requirements. The integration of NIN verification is intended to strengthen identity tracking, curb fraudulent activities, and ensure proper tax documentation within the sector.

Licensed gaming operators will be responsible for administering the deductions and ensuring that remittances are made in strict accordance with regulatory guidelines. They are also expected to maintain accurate records of all transactions to guarantee transparency and facilitate possible audits or compliance checks.

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Mr Bashir clarified that players will not be required to make separate tax payments after receiving their winnings. Instead, they will receive their payouts net of the five percent statutory deduction. He further noted that the deducted amount will serve as a tax credit for the player, meaning it can be recognised for tax purposes where applicable.

Reiterating the urgency of the directive, the CEO confirmed that all licensed operators in Lagos State have been mandated to commence the deductions without delay. The government signalled that regulatory monitoring would be intensified to ensure full compliance across the industry.

The move underscores Lagos State’s continued efforts to widen its tax base while modernising revenue collection systems in line with evolving economic activities.