The Lagos State Government has officially begun enforcing a 5% withholding tax on winnings from licensed gaming and betting platforms, marking a major development in Nigeria’s digital gaming sector. The tax is applied to net payouts, meaning players now receive winnings after the deduction.
The move comes as Lagos experiences rapid growth in online sports betting and gaming activities. Millions of bettors participate daily, prompting the government to formalize taxation and ensure the sector contributes fairly to public revenue. The Lagos State Internal Revenue Service (LIRS) has positioned this measure as part of a broader strategy to enhance compliance, transparency, and oversight of digital financial activities.
Under the new rule, licensed operators automatically deduct 5% from all net winnings before payouts. For instance, a bettor who wins ₦100,000 will now receive ₦95,000. Some platforms may also require a National Identification Number (NIN) for identity verification in line with KYC regulations.
The impact is felt across the sector. Licensed operators must update systems to comply with the deduction, while players see reduced payouts but can use the withheld tax as a credit toward personal tax obligations. The government stresses that only licensed operators are affected, leaving unregulated platforms outside the formal tax system.
Industry reactions are mixed. Advocates say the tax formalizes and strengthens the gaming industry, while critics worry it could push bettors toward unlicensed operators. Nevertheless, the Lagos Government maintains that the measure will provide a sustainable revenue stream and improve regulatory oversight.
As Nigeria’s gaming sector continues to grow, the 5% tax highlights Lagos State’s commitment to regulating the industry, ensuring transparency, and capturing revenue from a digital economy that shows no signs of slowing.