Value added tax considerations for casino operations in Nigeria

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By product category, the global betting market can be broadly segmented into lottery sports, casinos and games and online betting. Due to the high popularity of lotteries globally, this was the largest segment of the market in 2018 as it had about 46% of the market share during the period. Casino activities have witnessed growth over the last decade due to technology advancement, digitization and the relaxation of laws guiding their operations across various countries. There has also been an increasing demand for online betting due to increasing number of youths in the population, digital revolution, live sports betting and ease of access to betting platform on mobile applications. This trend is expected to lead to market penetration and significant growth of this segment.

In Nigeria, the most popular form of these wager activities are sports betting (football league promotions, the pools etc.), the lottery and slot machines. Other segments of the Nigerian Gaming industry include gaming machines, scratch cards and interactive games, promotional lotteries run by various companies. It is expected that technology will continue to play a key role in developing and shaping the industry in Nigeria.

Regulatory Framework in Nigeria

At the federal level, the industry is regulated by the National Lottery (Amendment) Act 2017 and the National Lottery Regulatory Commission (under the National Lottery Regulation, 2007 while at the state level, it is only Lagos state that has the Lagos State Lotteries Law 2008 (LLL). Other states in Nigeria and the Federal Capital Territory, Abuja are yet to enact any lottery laws. Therefore, these regions rely on the provisions of the National Lottery (Amendment) Act 2017 (the Lottery Act) and the National Lottery Regulation 2007 (the Regulation).

The Lottery Act defines “Game” as pari-mutuel and fixed odds and any other lottery that has the nature and character of the game. Further, Lottery is defined in the Lottery Act to include any game, scheme, arrangement, system, plan, promotional competition or device for the distribution of prizes by lot or chance, or as a result of the exercise of skill and chance based on the outcome of sporting events or any other device which the President[3] may be notice in the gazette declare to be lottery and which shall be operated according to a licence.

This article focuses on the VAT considerations for Casino operations in Nigeria in light of the Finance Act 2020 and National Lottery (Amendment) Act 2017.

It is worthy of note that the Casino (Licensing) Law 1964, which was the first attempt to legalise and regulate the industry, defined a Casino to mean any building in respect of which a license has been issued and to which members of the public authorized by the licensee, have access for the purpose of playing prescribed games of chance.

The Finance Act 2020 and VAT Considerations for Casino Activities

Gaming houses (for instance, Casinos) earn revenue on gaming activities by:

1 either charging the punters/patrons/bettors an entrance fee, commission for entry or to place a stake, or a fee for using the gaming facility or

2 earn revenue from the positive difference between the amount staked and the patrons/bettors’ winnings.

While it has been a long-standing debate on whether the casino activities are by their nature services and therefore the applicability of VAT has been called to question, some countries have deemed this a supply by virtue of their extant provisions (for instance, South Africa).

It is often said that patrons of Casinos derive some form of social amusement from the gaming activity, thus “entertainment” in the form of lottery and gaming services are provided by the Casino operators. The VAT Act defines “entertainment” to include any exhibition and performance in which the admission of people is subject to payment by such persons albeit some specified exceptions.

Based on the above, key questions that comes to mind include: a) Could the gaming houses be said to be supplying a service? b) Where the gaming house/ casino does not charge an entrance or admission fee, would VAT be applicable?

Section 2 of the VAT Act as amended by the Finance Act 2020, provides that the tax shall be charged and payable on all supplies of goods and services in Nigeria other than those listed in the First Schedule to the Act (i.e. exempt goods and services and zero rated goods and services).

The amendments to the VAT Act by the Finance Act 2020 appears to have put some clarity to this in the definition of a service for VAT purpose. The Finance Act 2020 has defined service to mean:

a) anything, other than goods, or services provided under a contract of employment; and

b) includes any intangible or incorporeal property (product, asset or property) over which a person has ownership or rights or from which he derives benefits and which can be transferred from one person to another, excluding interest in land and building, money or security.

From (a) above, anything that is not a good or services provided under a contract of employment can be classified as a service. Further, in so far as the service does not fall within the category listed in the First Schedule to the Act, then it is liable to VAT. On this basis, the argument that gaming activities in casinos should not be considered VATable may no longer be tenable.

However, the Lottery Act introduced a special tax regime for lottery companies in Nigeria. Specifically, section 35A (1) and (2) of the Lottery Act provides that there shall be imposed and charged a tax to be known as the Lottery Companies Income Tax (lottery tax) at the rate of 7% on the net proceeds of the licensee at the end of each assessment year, to be administered and managed by the Federal Inland Revenue Service (FIRS). Where a licensee has been assessed for lottery tax in any year, the licensee shall be exempted from the provisions of the CIT Act and the Value Added Tax Act (“VAT Act”).

From the above, Casino operators may be faced with multiple taxes as the provisions in the Lottery Act contravene those of the VAT Act (as amended). While the Lottery Act specifically exempts VAT from casino operators, the VAT Act has defined services to be widely encompassing and therefore the casino operator may have to comply with the provisions.

Further and to buttress the above, the FIRS during a stakeholders’ meeting organised in conjunction with the National Lottery Regulatory Commission in 2019, stated its plans to charge VAT on gaming activities and automate VAT collection from operators in the industry. Given that the Finance Act 2020 also provides for the automation of the FIRS system with the taxpayers’, via the deployment of technology and process automation, it is necessary for the FIRS to communicate clearly the modalities for the collection /remittance of the VAT due on gaming activities.

Also, it is important that there is juxtaposition between the various legislations and regulations guiding the affairs of the gaming houses. This will ensure that the operators clearly understand their tax obligations and minimize dispute with the tax authorities.


While there is no doubt that gaming activities also contribute to the growth of the economy, it is necessary for the government to ensure the appropriate regulatory and fiscal framework is put in place to regulate and derive tax revenue from the activities of this growing sector. Also, it is important for the government to provide clarity on fiscal obligations of the gaming house, such that the government plugs potential tax leakages and prevents these gaming houses from suffering multiple taxes.

Abu is a manager in the Tax Regulatory, People Service Division in KPMG Nigeria. The author can be contacted at