Lagos Introduces 5% Withholding Tax on Gaming Winnings

By Aderonke Oni | February 21, 2026 | 10:48 am

The Lagos State Government has begun enforcing a 5% withholding tax (WHT) on winnings from gaming and betting activities conducted through licensed operators in the state. The directive takes immediate effect, requiring players to receive payouts net of the deduction.

The announcement was made by Are Bashir, Chief Executive Officer of the Lagos State Lotteries and Gaming Authority. Licensed operators are now required to remit withheld amounts directly to the Lagos State Internal Revenue Service (LIRS), strengthening revenue collection and ensuring compliance.

How the Tax Works

Automatic Deduction: Operators withhold 5% from all gaming winnings before payouts.

Remittance: Collected taxes are sent to the LIRS promptly.

KYC Compliance: Players may need to provide their National Identification Number (NIN) to align with Know Your Customer (KYC) rules.

Why Lagos Implemented the Measure

Officials have highlighted several objectives behind this tax initiative:

Strengthening tax compliance in the gaming and betting sector.

Enhancing transparency and accountability in revenue collection.

Regulating the growing gaming industry to protect players and the state’s financial interests.

Implications for Players and Operators

Players: Receive winnings after the 5% deduction; the tax may count as a credit for income tax purposes.

Operators: Must update their systems to ensure compliance with automatic deduction and reporting requirements.

Analysis

This move positions Lagos as one of the first Nigerian states to formalize taxation on gaming winnings, reflecting global trends in the regulation of betting and gambling revenues. While players will see slightly reduced payouts, the policy is expected to increase accountability, curb tax evasion, and provide additional revenue for the state.

It also signals the government’s intent to modernize and formalize the gaming sector, creating a structured environment where operators are accountable and players are protected.

For players and operators alike, understanding compliance requirements will be critical to avoid penalties and ensure smooth participation in the gaming industry.