Lawyers have explained the legal implications and challenges associated with a judgment from the Supreme Court that nullified the National Lottery Act 2005, enacted by the National Assembly.
The apex court’s recent verdict was based on the grounds that the said act was enacted contrary to the powers of the National Assembly.
The judgment followed a long-running suit initiated in 2008 by the Lagos State government against the Federal Government, which sought a determination over who should control and regulate the lottery and gaming sector.
National Lottery Under State’s Purview – Apex Court
The Attorney-General of Lagos State, through Wole Olanipekun SAN, had challenged the legislative competence of the National Assembly to make any law for the regulation and control of the operation of the lottery in Nigeria.
He argued that “such matters do not fall within the 68 items exhaustively set out in Part I of the Second Schedule to the 1999 Constitution.”
In a unanimous judgment, a seven-member panel of the apex court agreed with the Lagos State government’s submissions, holding that the National Assembly lacked the powers to legislate on issues relating to lotteries and games of chance.
Channels Television reported that the court held “such powers only reside with the state Houses of Assembly, which possess exclusive jurisdiction over lottery and related issues.”
The apex court subsequently quashed the National Lottery Act entirely for contravening the 1999 Constitution.
What This Means
Speaking to Nairametrics in an exclusive interview, media personality and human rights lawyer Barrister Frank Tietie said the judgment of the apex court is a welcome development but a “double-edged sword.”
- He explained that it would have been cleaner if lottery and games of chance were regulated at the national level, where anyone who buys a lottery ticket would be able to cash in.
- He said that while the verdict is good in terms of generating revenue for the states, there would be confusion in terms of regulation and enforcement of standards.
He explained, “Promotions by banks are also part of the lottery business. Promotions like ‘open an account with N2,000, win N1,000,000’ or ‘buy such-and-such from us, stay in our hotel, and get an all-expenses-paid trip to Dubai.’ All those forms of promotions are deemed to be part of the lottery business.”
“It’s easy to say that lotteries are under the control and regulation of the state.
“But when it comes to enforcement of standards and the persons who are able to use such lottery systems, how can a state regulate a lottery business when the consumers are spread across the country? That poses a regulatory challenge.”
- Tietie advised stakeholders to find a way to establish a uniform standard of regulation and enforcement for the lottery business.
“Mark my words: a uniform national standard. Because if we have many confusing lottery regulations done by the states, we might have a problem,” he said.
- While advocating for national uniform lottery regulations and standards, Tietie stressed that another positive aspect of the apex court judgment is that state governments will now have the competitive regulatory conditions necessary to attract lottery businesses away from Lagos State, where prominent lottery businesses are currently concentrated.
- He said that because of the multiplicity of regulatory standards over a business with national appeal, there is a need to have a uniform standard at the national level.
Reacting in an exclusive interview with Nairametrics, Barrister Opeyemi Owolabi said the implication of the apex court verdict is that the National Lottery Act is void and will no longer be applicable, as states except FCT can now go ahead to enact their respective lottery laws regarding lottery within their territories.
- He added that “States now have the opportunity to generate Internally Generated Revenue (IGR) through the lottery and other incidental matters.”
- Furthermore, he added that the judgment has provided a legal opportunity for states to sue the federal government regarding past revenues earned from lotteries and games of chance nationwide.
“The states can bring an action to seek an order compelling the FG to account for what it has earned so far or what it is currently earning and make due remittances based on derivation,” he said.
For public interest lawyer Opatola Victor, the apex court’s verdict implies that the act is only applicable and valid within the FCT, while the states can make their own laws regarding lotteries and games of chance.
- He added that the lottery tax states were supposed to pay to the federal government under the Lottery Act is no longer applicable in states, except for those in the FCT.
- He explained that the Supreme Court judgment means that the lottery and games of chance industry “have been thrown wide open” in the sense that the 36 states in the country will likely create “36 laws regulating lottery and games of chance in this country.”
- He added that this could constitute problems for investors already in the country or planning to invest in Nigeria, as they would most likely be paying 36 different lottery taxes across Nigerian states.
“This (the quashing of the National Lottery Act) will lead to a lot of problems for investors and players in the industry. If you have to obey 36 different (lottery) laws or 20 different laws, it’s quite demanding.”
“For instance, in one country, if all the 36 states enact 36 different lottery laws, it will be difficult for businesses. If one business is following about 36 different laws or 20 different laws, it gets complicated.”
“The problem investors are facing—or will face—is that they will have to pay a percentage of tax to each state in which their business is operating. That is the problem,” he added.
- Furthermore, he said if a state has not enacted its own lottery laws, that means lotteries and games of chance will not be regulated in that space.
“That means the lottery business can just go on in that space without any regulation,” he said.
- He advised states without lottery laws to approach the Attorney General of the Federation for a meeting to discuss how they can harmonize the collection of funds from all the players in the country while remitting the same nationwide.
- He added that this harmonization can be done at the national level or in geopolitical zones.
Interpreting the implications of the apex court’s verdict in a statement, Templars law firm also stated that the decision of the Supreme Court is immediately enforceable throughout the Federal Republic of Nigeria based on Section 287(1) of the 1999 Constitution, which provides that “The decisions of the Supreme Court shall be enforced in any part of the Federation by all authorities and persons, and by courts with subordinate jurisdiction to that of the Supreme Court.”
- The firm added that the second implication of the Supreme Court’s decision is that the National Lottery Act can no longer operate generally throughout the Federal Republic of Nigeria as it previously did.
“The Act will now only apply to the FCT, which is ordinarily within the legislative remit of the National Assembly,” it stated.
- Templars added that companies involved in the lottery business will no longer be required to pay 7% of their net proceeds as lottery tax to the Federal Government, as stipulated under the Lottery Act, except those operating within the FCT.
“Effectively, they will be required to pay taxes relating to lottery businesses stipulated by the respective laws of the states where they operate and to the state government,” the statement added.
- The final implication, according to Templars, is that the decision of the Supreme Court, being the absolute position on the subject (which cannot be appealed), means the only options left are to have the decision enforced by all authorities and persons, except in the FCT, or until the National Assembly amends the 1999 Constitution to expressly include lotteries as a subject under the exclusive or concurrent legislative lists.
What You Should Know
The apex court’s judgment comes several weeks after President Bola Tinubu launched a comprehensive 2024-2028 Strategic Plan to reposition the National Lottery Trust Fund (NLTF) for more effective delivery of community-oriented projects.
During the unveiling of the Fund at the Banquet Hall of the State House in Abuja, the Secretary to the Government of the Federation, Senator George Akume, who represented the President, stated: “Through the National Lottery Trust Fund, the President believes that help will reach many Nigerians, providing support to vulnerable individuals and communities.”
- The Fund is an agency of the Federal Government established under the quashed National Lottery Act 2005 to take custody of a certain percentage of the proceeds of all national lottery operations in Nigeria, as stated in Section 24(3) of the Act, and utilize the funds in the execution of some good cause projects across the country.
- Section 40(a) of the Act listed the good cause projects covered by the mandate to include “projects for the advancement, upliftment, and promotion of sports development, education, social services, public welfare and relief, and management of natural disasters in Nigeria.”
Section 40(b) of the Act empowers the Trust Fund to also “apply the proceeds of the fund from time to time to the cost of administration of the agency.”
- Last year, the House of Representatives Committee on Finance announced a status inquiry into the National Lottery Trust Fund, following allegations of misusing its entire internally generated revenue (IGR) worth N2.5 billion in 2023.
- According to the lawmakers, the revenue generated by the Trust Fund was believed to have been misappropriated by those heading the fund.
- James Faleke, the Committee Chairman, issued the directive during the interactive session on the 2024-2026 Medium-Term Expenditure Framework and Fiscal Strategy Paper.