New Payout Rules: Lagos Enforces 5% Tax on All Betting Winnings

New Payout Rules: Lagos Enforces 5% Tax on All Betting Winnings. The Lagos State Government, through the Lagos State Lotteries and Gaming Authority (LSLGA), has officially commenced the implementation of a 5% Withholding Tax (WHT) on all gaming winnings. This directive, which took effect immediately as of February 20, 2026, requires all licensed operators within the state to deduct the tax automatically at the point of payout.This move marks a significant shift in the state’s fiscal policy toward the multi-billion naira gaming industry, impacting millions of punters who use Lagos-licensed platforms.

Key Highlights of the New Directive. According to the public notice issued by Bashir Are, the Chief Executive Officer of the LSLGA, the new framework is designed to bring the gaming sector into full compliance with existing Nigerian tax laws.Automatic Deduction: The 5% tax is deducted from the net winnings before the final balance is paid into the player’s account or handed over.Targeted Platforms: This applies to all gaming categories, including sports betting, lotteries, and online casino games, provided the operator is licensed under Lagos State.Revenue Management: All deducted funds are to be remitted directly to the Lagos State Internal Revenue Service (LIRS).Tax Credit Benefit: In a bid to soften the blow for high-earning players, the government stated that the deducted amount will be recorded as a tax credit, which players can use to offset their overall personal income tax obligations.

Why Is the Government Doing This? The Lagos State Government has cited three primary reasons for enforcing this “winnings cut”:Revenue Generation: With the gaming sector reaching a reported value of over £2.85bn (N5.4 Trillion) in 2025, the state is looking to formalize revenue streams from the industry.Transparency & Accountability: By mandating automatic deductions, the LSLGA aims to create a clearer trail of transactions between operators, players, and the government.Regulatory Consolidation: Following the recent rejection of the National Gaming Bill, which would have centralized control in Abuja, Lagos is asserting its right to regulate and tax gaming activities within its borders.What This Means for PuntersIf you are a bettor in Lagos, your “take-home” just got a bit smaller. For instance, if you win a net sum of ₦100,000, the operator will now automatically deduct ₦5,000, leaving you with ₦95,000.Furthermore, the government is strengthening KYC (Know Your Customer) requirements. Players are now increasingly required to provide their National Identification Number (NIN) to ensure that tax credits are accurately assigned to the correct individuals.

Note: While some industry experts warn that this could drive punters toward unregulated “black market” offshore sites, the LSLGA has maintained that this is a necessary step for a sustainable and transparent gaming ecosystem in Lagos.