EXCLUSIVE: Investigation- Susceptibility and Vulnerability of Nigeria’s Lottery and Gaming Sector, to Money Laundering and Terrorism Financing


At a time Nigeria bleeds from borrowing to finance its budget, it seems to have resolved to seek alternative ways to generate revenue and cut down its debt profile. In the wake of this financial and national reputational quagmire, Nigeria’s gaming industry, a multi-billion naira generating enclave, is  fraught with varying degrees of malpractice, capital repatriations, under-hand dealing, fraud, allegations of economic sabotage, false declaration, porous revenue collection process and loss of billions of Naira in revenue to government due to the regulator’s and operator’s connivance. If the President’s plan to develop the country through alternative income streams aside from crude oil and borrowing truly holds sway, then blocking the loophole of tax evasion and monumental fraud in the billion-naira revenue-generating gaming industry is germane; as there is the need for a Presidential directive prompting a forensic audit of the National Lottery Regulatory Commission, the licensed operators and a review of the Lottery Act 2005, Adedayo Adejobi writes …

 The State of Nigeria’s Gaming Industry….

From Las Vegas to Lagos, the lottery industry is a huge landmine, as it generates billions in dollars to supplement other countries’ budgetary allocations and promote good causes, especially with the huge revenues amassed from the gaming public (stakers) by the operators. But in Nigeria, some of the operators declare and remit a minute fraction of what could be a day or at most a week’s earning, to the government every year.

By the existing laws, operators are meant to remit exactly 20% of their total sales revenue to the National Lottery Trust Fund through the National Lottery Regulatory Commission, but sadly, that is not the case in Nigeria due to corruption. These sums, known as “good cause remittances”, are meant to be used by the Federal Government to finance projects like roads, healthcare, education, security, sports, environmental interventions or just about any project that will positively impact society. But investigations have revealed that the National Lottery Regulatory Commission seems to be averse to its mandate, as the mafia-masked regulator seems to have become handicapped in the hands of the cabal run by some of the operators in the various gaming subsectors of the industry.

The Lottery Act further stipulates that while operators are to keep 30% of their total sales revenue for their operations, they are to pay-out as much as 50% of the sales revenue to stakers as winnings, but the stark reality is that most operators conduct their activities and resulting draws in the most opaque ways seen anywhere in the world, resulting in high incidences of result manipulation that makes it difficult to implement this law by any breadth.

BnlPulse gathered that winnings are inflated in some areas of high play to spur stakers, or winners are deprived in other areas altogether. Complaints by members of the staking public about the activities of some gaming companies against their winnings are left unattended by the regulators, as can be seen from petitions on their poorly run social media platforms. Such irresponsive behaviour by the regulators will continue to cast a doubt in the minds of stakers and encourage unethical practices by operators.

Premier Lotto as the Scapegoat and the Setback to the Betting Industry…

Kessington Adebutu, Nigeria’s gambling mogul whose business empire has enjoyed decades of patronage as a household name across the country, has become a new target of a vast corruption investigation by the Economic and Financial Crimes Commission (EFCC).

As part of the investigation on Tuesday, anti-graft detectives at the EFCC office in Lagos detained and questioned Segun Adebutu, son of the octogenarian, questioning him on matters ranging from alleged tax fraud to economic sabotage.

Anti-graft officials said Mr Adebutu’s business activities recently became a subject of their suspicion following a petition from another betting company, Western Lotto. The December 2019 petition from Western Lotto, run by politician Buruji Kashamu, asked the EFCC to investigate billions of naira in lost government revenues and tax fraud against Mr Adebutu’s Premier Lotto.

Officials have disclosed that they have identified at least N5 billion in revenue losses against the government since the investigation began — directly blaming the management of Premier Lotto for allegedly short-changing Nigerians.

When the reporter reached out to Mr Adebutu requesting to comment about the arrest and on-going investigation into his company, he did not return BnlPulse’s request for comments.

The success of Mr Adebutu’s betting exploits imbued former President Olusegun Obasanjo’s interest in establishing a federal agency to regulate lotteries across Nigeria in 2005. Several private entities have since sprung up, taking bets from multiple sporting activities, especially football. But the raging allegations against Premier Lotto, by far the largest betting conglomerate in Nigeria, could deal a setback to the industry’s hopes for competing with banking in the financial services sub-sector, according to officials familiar with the investigation.

 How Regulators and Operators flout the Lottery Act and erode public trust….

Asides from the National Lottery Regulatory Commission, there are a couple of State Lottery Boards or gaming regulation agencies across the country, but most of their actions or inactions, leave so much room for operators to dupe the public, flout the laws of the country in many ways and kill any move by the government to generate more revenue from the Industry, with a few examples like the failed ‘National Lottery Agent Mapping exercise’ launched in 2016 by the former Director General of the National Lottery Regulatory Commission, Mr. Adolphus Joe Ekpe, and the recent attempts to automate tax collection from gaming companies by the former CEO of the Federal Internal Revenue Service, Mr. Babatunde Fowler, to mention but a few.

For instance, while most licensed operators under-declare their number of machines used in selling tickets, betting outlets or platforms, other companies that are not licensed as lottery operators use telecommunications platforms like SMS or promotional activities to rake in billions from Nigerians, without any concrete effort by the federal and state regulators to ascertain the actual amounts generated as sales revenue. Thus, these licensed and illegal operators evade taxes or good cause remittances by paying little or nothing to the government and raping the public, as little or nothing from these huge gaming revenues is ploughed back to good causes that benefit the society.

From independent investigations on the good-cause activities of the regulators across the country, the Lagos State Lottery Board appears to be the pacesetter, as it has done exceedingly well with the good causes undertaken with revenue from lotteries in the state. The volume and nature of these projects have no doubt had a meaningful impact on the lives of members of the public. As published on the good causes page of their website, the reporter did confirm from a number of sources that the various projects ranging from electrification, healthcare, security, environment and education, amongst others, have indeed been a blessing to countless number of people, including stakers and non-stakers alike. It would implore the Board to create more awareness on its good causes projects, so that more people can better appreciate some of the values that gaming adds to society.

At the federal level, the National Lottery Trust Fund has received similar good remittance monies but has embarked on a few projects with little or no bearing on social causes. If indeed it’s willing to prove otherwise, it may be willing to make public by publishing its revenue received from the operators in addition to its budget from the federal government, as well as the projects they have been expended on since inception; as there appears to be nothing on its website or in the public domain but for a few donation of sport jerseys and footballs at various times.

National Lottery Regulatory Commission is another potential NNPC, while gaming can be an alternative crude oil for Nigeria…

According to the Nigerian Bureau of Statistics in 2019, records show that over 21 million Nigerians played sports betting daily, whilst over six million play number lottery daily. On average, over 27 million people, over 10% of the Nigeria’s population, play a game or the other every day.  Again, this is exclusive of those millions of people who play promotional games reeled out by telecommunication companies, banks and the big FMCG brands which are also meant to be regulated by the National Lottery Regulatory Commission but albeit, without a verifiable framework or database for doing so.

As a lottery is defined as “any game of chance” it goes to mean that all activities in Nigeria from the good old pools, casinos, sports betting, number lotteries, scratch card games, online games, promotional draws of companies and even text messages from telecommunications operators are all revenue sources for the government. The global online gaming market is forecast to reach $128 billion by 2026 and the House of Representatives in the 8th National Assembly recently revealed that some lottery operators were owing the government as much as $16 billion dollars in unpaid remittances.

Recently, the News Agency of Nigeria (NAN) reported that roughly 60 million Nigerians between the ages of 18 and 40 are involved in active sports betting. Over 2 billion Naira ($5.9 million) is spent on sports betting daily in Nigeria, which translates to nearly $2.2 billion per annum.

With the above statistics, little wonder the Honourable Minister of Special Duties described the lottery industry as a goldmine for Nigeria during a recent visit to the office of the National Lottery Regulatory Commission, which is one of the agencies under his supervision. Senator Akume had said: “The President, Muhammadu Buhari, has made his commitment to lifting over 100 million Nigerians out of poverty in the next 10 years and your commission is in a position to play a major role. If this commission is properly organised, I believe, and strongly too, that there’s no way you can’t rake in billions of naira to the coffers of this government. You have told me and others who are experts have also told me that the possibilities here are huge and enormous.”

Regulatory capture by the Lottery cabal is alleged to involve silencing EFCC and others

Asides the various forms of fraud perpetrated by some operators against the people, rivalry between federal and state level regulators over vested interests of some operators remain a big issue, while security agencies saddled with the responsibility of protecting the country from economic sabotage appear to be looking the other way; thus reinforcing rumours that a cabal made up of some big operators in the Lottery industry are implementing a well-thought game of ‘total regulatory capture’ to enable them continually smile to the banks.

For the security agencies angle of this perceived regulatory capture, gaming operators are considered ‘designated non-financial institutions’ for purposes of anti-money laundering regulatory requirements. They are also subject to other regulatory requirements such as the Central Bank of Nigeria guidelines, Money Laundering (Prohibition) Act (As Amended), the Special Control Unit against Money Laundering and the Terrorism (Prevention) Act.

However, since 1960 till date, it’s difficult to find, if any exists at all, of the arrest and/or prosecution of any illegal lottery operator after being apprehended by any federal or state regulator. With widespread reports of such apprehensions by these regulators, it appears the culprits simply disappear into thin air, as they are never handed over to the security agencies, despite having men of the Nigeria police on its taskforce team whenever such arrests are made.

Speaking at an event organised by the Lottery Operators Forum last August in Abuja, a Director of the department of Special Control Unit against Money Laundering, SCUML, from the Economic & Financial Crimes Commission – Mr Bello Bamanga – had highlighted that gaming operations were highly susceptible to money laundering activities and chided most Lottery operators for their brazen violation of the extant laws of the country. He warned that the laws required operators to preserve their stakers, draw and winning records for at least 10 years after each game but failed to name any single instance where the Commission had carried out its responsibility against any operator; thus fuelling the insinuation that SCUML are also on the payroll of the Lottery cabal.

With a retinue of lotteries approved by the National Lottery Regulatory Commission, undeclared records of their sales revenue, insignificant good cause remittances, the growing influx of foreigners as operators in the Nigerian gaming space in the last decade and their penchant for capital repatriation to their home countries and high potential of using the industry for money laundering, there is a dire need to checkmate the activities of the regulators and their operators by the agencies like the EFCC and ICPC, amongst others, in order to protect the gaming public and more importantly, generating the appropriate revenue for government.

How operators expose Nigeria to ridicule and fleece customers…

Because of the manipulative tendencies of some gaming operators, unstable policies of regulators and the penchant for foreign goods by most Nigerians, the gaming public has grown to trust foreign games and draws than the local ones. The reporter checks revealed that most stakers prefer to stake on the games drawn by a foreign company in Ghana and popularly known as “Ghana games” for number lotteries category and others in the sports bet category will only stake on the games in which foreign football teams are playing, as against Nigerian league.

On the average, around 80% of the number lottery games played in Nigeria by all the operators are on the famous Ghana games, while only about 20% is played on their own draws known as indoor games, while it is around 100% foreign soccer games results that are employed by sports bet operators for the Nigerian gaming market.

But while the usage of sports results from foreign leagues by operators is understandable due to the absence of a regular year-round league, lack of multi-media transmission and coverage facilities, poor league promotion and match fixing allegations, amongst others, the same cannot be said of the number lotteries, as all efforts in the past to promote a national game for Nigeria have failed both by state and private operators.

Findings revealed that the reason for the reluctance of the regulators and some operators to develop a reliable national game for the country is due to the fraudulent use of the Ghana games by most operators and grave silence of the National Lottery Regulatory Commission, despite many complaints and petitions from the Ghana Lottery Authority and its operator, the LMC VAS Ghana Ltd, against Nigerian lottery operators.

Only last month, the reporter sighted the agreement between the Ghana games company and a Nigerian operator, M/s Western Lotto Ltd, and an order of the high court, granting it the right to enforce its rights as the sole franchisee of the Ghana games in Nigeria, thus ending decades of fraudulent use of game results and fleecing of Nigerians by about 23 other operators listed in the suit including some very big and unexpected names. The rights acquired have done a big repair to the image of Nigeria in the global lottery community as a responsible nation.

Upon investigations leading to Ghana’s Lottery Authority, up until Western Lotto recently acquired rights to the Ghana games, no Nigerian company was paying for the rights to use the game in Nigeria, despite raking in hundreds of billions of naira from its use yearly. In fact, it was revealed that, hitherto, operators stationed an observer in the premises of the Ghanaian operator who simply copied the results of the draws and sent to his principals in Lagos immediately, to compute into their servers and then pay those stakers with winning tickets, whilst pocketing hundreds of millions of naira daily.

This practice has continued for years and had contributed to the anger of the Ghanaian authorities and perhaps may have contributed to the increasing wave of anti-Nigerian sentiments experienced by innocent Nigerian-owned businesses in Ghana, in addition to the border closures.

Such huge revenues generated, albeit illegally, from the staking public in the last twenty years could at the least have been better put to use by supporting the Nigerian League or more good causes, instead of the series of promotional, directionless and irresponsible entertainment events around promiscuity, sex, drugs, addiction and other negative vices being sponsored by some operators lately, with no positive bearing on the Nigerian youths nor direct good cause values.

When contacted, the General Manager of Western Lotto, Mr Tajudeen Usman, said that “in line with the acquisition of the franchise called Ghana games which have become popular in Nigeria for quite some time, operators have been using these games without paying royalties to the owners and they are patented. Besides, stakers who play these games are being fleeced by operators. There have been cases where stakers play without knowing the results are out. The convenient excuse they give is that the results had been out before they played, and so whatever results that emerge become null and void. We met all the requirements and have acquired the rights for drawing time. We are being carried in decisions made and now also represent the interests of the company in Nigeria. We have the franchise. We have notified all other companies running the operations illegally, such that if the must operate, they must pass through our channel.”

Efforts to reach the regulator –Nigerian Lottery Regulatory Commission proved abortive.

Key offences and penalties for unlawful Gaming

Whilst  investigations are yet to unravel any such infractions that have been witnessed in the sports bet sector, it is authoritatively instructive to note that what some number lottery operators have done with the Ghana games constitute a major offence under the Lottery Act, which includes the provision of a service or supply without the necessary authorisation, aiding or abetting such provision, and failing to effect payments to the gaming authority. Other key offences arising under other applicable laws include money laundering offences and data protection offences, both of which are directly relevant to gaming operators-online and land-based. Sanctions also apply to the breach of or non-compliance or compliance breaches.

According to the global regulatory body, any person found guilty of undertaking unlawful gaming activity is liable to a hefty fine or even imprisonment for up to five years, or to both fine and imprisonment. In addition to any penalty outlined above, any machine or other device and any money used in the commission of the offence should be seized and forfeited in favour of the government.

A Muscled Union….

Not surprisingly, the gaming public and the government will remain the ultimate losers, with the influx of illegal operators, mute security agencies, an uneven playing field created by capitalist operators, subtly endorsed by the regulators. With a deluge of complaints from aggrieved stakers, angry employees and concerned members of the public, the reporter learned that a labour union exists in the industry and which appears to have been muscled into near non-existence.

World over, trade unions are known to be the conscience of the society and they sometimes have been known to call out capitalist and anti-labour corporations, hold regulators accountable and spark protests that even lead to leadership change in many climes, but the role of the National Union of Lottery Agents and Employees (NULAE) is not clear in the whole of these monumental fraudulent practices being unearthed.

BnlPulse, however, learnt that the union has been muscled into near silence by some major operators seeking to remain dominant players in the field, with the tactical connivance of the regulators, but has just risen from its last Central Working Committee meeting in January, to declare a tougher anti-union posture.

According to the Secretary of NULAE, Comrade Gregory Olatunji, a few stakeholders noticed the lacuna in the industry as an unhealthy development and started the process to register one with the federal government since 2011. After fulfilling all the conditions of application over a period of three years, NULAE was finally registered in November 2014 as the trade union for the industry, to protect the interest of the agents, employees and the entire gaming public. For clarity, the gaming industry covers sports bet, casinos, pools, number lotteries, scratch card, promotional activities and all games of chance.

Speaking further, Olatunji said: “our initial hopes of being commended for the initiative by industry stakeholders was dashed when we were dragged to court in 2016 by Premier Lotto, in its bid to de-register the union, bar it from living to its civic responsibility and continue its grip on the affairs of the industry. Interestingly, in the course of the court proceedings, the said operator employed all tactics known to the books to deceive the court, including harassing some of its employees to write to the court and deny the union, victimising identified members of the union by removing their parameters and even registering a contraption with the corporate affairs commission called Premier Lottery Agents association. The court in its wisdom threw out their entire case and urged the union to continue its civic responsibility to its members and the government.”

By law, the moment a union is formed and duly registered by the federal government for an industry, everybody shall be a member of that union unless they opt out in writing. Meaning they must first have joined before they opt out in writing as individuals.

According to documents sighted by the reporter, the union waited till 2018 to conduct its Branch Delegates Conference held in Asaba and was hosted by the Delta State government. At the event, a new leadership was elected by the union and produced executives from various lottery companies, led by Comrade Alhaji Mustapha Olusami – himself an agent of Premier Lotto, leading to the reconciliation of the union with most of the operators.

Re-stating its resolve to rid its industry of anti-labour operators, Olatunji said, “With members, agents and lottery operators in both the private and public sectors of the industry, NULAE is now on a mission to take its rightful place. We will deal decisively with operators who undermine the union or engage in anti-labour practices. The union is resolute and committed to ensuring that the lottery industry has a fair playing field and we are glad that the operator who has been trying to muscle the union has lost on all grounds, from the industrial court, to the police and even in underhanded petitions to regulators and they eventually signed an agreement with the union in September 2019 as brokered by the Ministry of Labour and Employment, agreeing to comply with the extant labour laws by allowing the union to address its employees, whilst requesting us to reach out to its agents; which it described as independent contractors.”

Commenting on the role of the regulators in teaming up with the union to fight the ills of the society, he said: “Since our registration as a union, we’ve embraced all the efforts of the regulators, particularly the last administration, where we help the National Lottery Regulatory Commission to enroll agents into the ‘National Agent Mapping Exercise’ – an action that made some operators annoyed with the union. However, we are increasingly surprised at the attitude of the current league of regulators who are apparently working in tandem with some operators to frustrate the union by refusing to carry the union along or invite it to any stakeholders meeting or engagements for reasons best known to them. Nonetheless, when we are ready, they will hear from us with hard evidence of their actions that have been provided to us by well-meaning Nigerians who work with them and who detest the actions of their leadership.’’

It is deeply alarming to see a regulator part of the federal government muscle an industry union registered by the government for selfish reasons. What an utter violation of oath of office.

Economic impact of non-compliance with Relevant Laws…

With reports of some lottery operators raking in as much as 400 million naira daily in the number lottery category and 2 billion daily in the sports bet sector, there is no better way to rescue itself from being regarded as fraudulent is the need for the regulators to start coming clean to Nigerians on good-cause remittance figures by each operator and the projects it executed and also if it is to rescue itself from the allegations of a failed, compromised institution and a veiled antagonist of the fight against corruption.

More worrisome is the stark reality that the Lottery revenues have in the last years been ravaged by controversies of fraud, corruption, economic sabotage, cases of a major operator running the affairs of the regulator by proxy particularly by way of nominating who sits on the lottery regulatory agencies of government.

With the hues and cries of the government daily on its inability to fund the budget and capital projects resorting to borrowing, there is indeed the need for all anti-corruption institutions to undertake a forensic audit of the players in the industry; as such non-compliance comes with a great level of distrust and the accompanying apathy that kills such industries on the long run.


The prospect of Nigeria and its huge economic potential is not without challenges, as proceeds from   advance   fee   fraud,   arms   trafficking,   bank   fraud,   bribery, corruption, and currency   trafficking all constitute major sources of illicit proceeds and source of financing terrorism in Nigeria.

Money laundering in Nigeria takes many forms, as perpetrators  launder  money  through phoney investments,  wire  transfer  to  offshore  banks,  deposits  into  foreign  banks,  round tripping, reselling imported goods such as luxury or used cars, textiles, and consumer electronics purchased with illicit funds, jewelry as well as bulk cash smuggling.

Consequently, Nigeria, in her  effort  to  rise  above  the  foregoing  menace,  successfully  conducted  its  first  National  Money Laundering and Terrorist Financing (ML/TF) Risk Assessment (NRA) in 2016 and found out that passing money between terrorists in illegal online lottery and gaming seems an effective opportunity and difficult to detect because of the opacity of such transactions, concluding that illegal gaming is highly vulnerable for Terrorism Financing.

In the words of Abubakar Malami, The Honourable Attorney General of the Federation and Minister of Justice, “One  of  the  critical  success  factors  of  any  anti-money  laundering  and  counter-financing  of terrorism (AMLCFT) regime is premised on the ability of a country to properly identify, assess and understand the money laundering and terrorist financing (ML/TF) risk elements prevalent in the jurisdiction with a view to efficiently allocate limited resources to address them as enshrined in the Financial Action Task Force (FATF) recommendation 1.”

If the President Buhari’s plan to develop the country through alternative sources of income without going a borrowing is genuine, blocking the loophole, tax evasion, and monumental fraud in the billion dollar revenue generating gaming and lottery industry is key to achieving a responsible gaming and lottery regulations.


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