Legislative and regulatory powers over lottery, gaming and betting in Nigeria

Introduction

Nigeria operates a federal system of government. Thus,  legislative powers are devolved between the national law making body (The National Assembly) and the Houses  of Assembly of each 36 state that make up the country.  Additionally, the National Assembly acts as the domestic law making body for the Federal Capital Territory (FCT) with  respect to matters which the State Houses of Assembly have  powers to legislate on. These legislative powers are clearly  delineated and enshrined in the Constitution of the Federal  Republic of Nigeria. By section 4(1) of the Constitution,1 the legislative powers of Nigeria are vested in the National  Assembly. Section 4(6) of the Constitution states that the  legislative powers of a state of the Federation is vested in the  House of Assembly of the state. 

In 2005, the National Assembly enacted the National  Lottery Act (the “Act”) which sought to regulate lottery and  lottery related activities (Sports Betting, Pools Betting,  etc.) throughout the federation. The Act also established  the National Lottery Regulatory Commission (NLRC) as  the federal regulatory body in charge of lottery and related  activities. The NLRC issued national and regional licenses  for the operation of lottery, sports betting, pools betting and  related activities throughout the country or a section of the  country. 

Prior to the enactment of the National Lottery Act of 2005,  some states in Nigeria had already enacted their domestic  laws to regulate gaming in their respective states.2 These state  laws also established regulatory bodies for gaming and lottery  activities in their respective states. 

In 2008, Lagos State sued the Federal Government and  the National Assembly at the Supreme Court in Suit No  SC/1/2008 – The Attorney-General of Lagos State & Ors v  The Attorney-General of the Federation & Ors,3 challenging  the constitutionality of the National Lottery Act 2005. The  contention of the plaintiffs in the suit was that lottery is not  within the legislative competence of the National Assembly;  rather it is within the residual legislative powers of the various  State Houses of Assembly as provided in the Constitution  of Nigeria. Thus, the National Lottery Act 2005 enacted by  the National Assembly for the purpose of regulating lottery  throughout the country is unconstitutional, null and void. On  the 22nd of November 2024, the Supreme Court of Nigeria  upheld the argument of the plaintiffs and nullified the National  Lottery Act, 2005 on the grounds that it was enacted ultra  vires the constitutional powers of the National Assembly. 

Legislative power over lottery and  gaming in Nigeria 

Under the Constitution of Nigeria, the National Assembly  has the sole legislative power over matters contained in  the Exclusive Legislative List.4 The scope of the concurrent  legislative powers of the National Assembly and Houses of  Assembly of the various states are outlined in the Concurrent  Legislative List.5 The Constitution went further to provide  that the Houses of Assembly of the various states shall have  the exclusive power to legislate on matters not contained in  the Exclusive Legislative List and Concurrent Legislative  List.6 Although those matters are not expressly listed in the  Constitution, they are referred to as the Residual List. 

It is pertinent to note that “lottery” is not expressly listed  in either the Exclusive Legislative List or the Concurrent  Legislative List under the Nigerian Constitution. Consequently,  the plaintiffs in the Supreme Court decision under review  argued that lottery, having not been listed in either the  Exclusive Legislative List or the Concurrent Legislative  list, falls under the Residual Legislative powers of the State  Houses of Assembly. For their part, the defendants argued

that the National Assembly has the sole authority to legislate  on lottery matters, premised on the viewpoint that lottery is  encapsulated under Item 62 of the Exclusive Legislative List  which relates to trade and commerce. They also argued that  the powers of the National Assembly extend to lottery matters  pursuant to Items 67 and 68 of the Exclusive Legislative List.  Items 62, 67 and 68 of the Exclusive Legislative List state as  follows: 

Item 62 

Trade and commerce, and in particular: 

1. Trade and commerce between Nigeria and other countries  including import of into and export of commodities from  Nigeria, and trade and commerce between states; 
2. Establishment of a purchasing authority with power  to acquire for export or sale in the world markets such  agricultural produce as may be designated by the National  Assembly; 
3. Inspection of produce to be exported from Nigeria and the  enforcement of grades and standard of quality in respect  of produce so inspected; 
4. Establishment of a body to prescribe and enforce standard  of goods and commodities offered for sale; 
5. Control of prices of goods and commodities designated by  the National Assembly as essential goods or commodities;  and 
6. Registration of business names. 

Item 67 

Any other matter with respect to which the National Assembly  has power to make laws in accordance with the provisions of  this Constitution. 

Item 68 

Any matter incidental or supplementary to any matter  mentioned elsewhere in this list. 

Is lottery a form of trade or commerce? As we stated earlier, central to the determination of the issues canvassed by the parties was whether lottery can be categorized  as a form of trade or commerce. In an attempt to resolve the  issue, the Supreme Court embarked on a definition of the term  ‘lottery’ thus: 

“So, what then is lottery? In the Oxford Advanced Learner’s  Dictionary, 7th Edition, lottery is defined as: 

1. A way of raising money for a government, charity, etc., in  which many tickets are sold and some of the tickets are  chosen by chance to win prizes. 
2. A situation in which what happens depends entirely on  chance. 

Lottery is also defined by the Black’s Law Dictionary 10th  Edition as: 

1. A system of deciding who will get something; choosing of  people’s name by chance. 
2. A method of raising revenues, esp. State Government  revenues, by selling tickets and giving prizes (usu. Cash  prize) to those who holds tickets with winning numbers  that are drawn at random. Also termed lotto. 

From the foregoing definition, lottery is a scheme or a game in  which participants must give something of value and a winner is  selected by chance or luck or random drawing, not by skill, and  the winner receives a benefit as a result of the chance- based  selection.” 

Lottery is a system of selling numbered tickets and giving prizes  to those people whose numbers are chosen by chance. Lottery  is an activity of chance with no definite assurance that there will  be an exchange of value. 

After it had defined lottery, the Court went further to define the  term “Trade and Commerce” in the following words: 

“Trade and Commerce can be described as the activities  involved in buying, selling and exchange of goods and services.  According to the Black’s Law Dictionary, 10th Edition, the  terms “trade” and “commerce” are defined similarly with slight  variations in wording. 

Trade: The exchange of goods, services, or both, for money  or other goods and services. It also refers to the business or  occupation in which one engages. 

Commerce: The buying and selling of goods or services,  especially on a large scale, and the activities involved in  the production, distribution, and consumption of those  goods and services. It encompasses all activities related to  the movement and exchange of goods and services across  markets.” 

The Court further relied on the definition of Trade and  Commerce stated in its previous decision in A. G Ogun State v  Aberuagba & Ors,8 where the Supreme Court held as follows: 

“…trade and commerce in Item 62 of the Exclusive Legislative  List are to be taken together and they both must mean  commercial intercourse. It means therefore that commercial  intercourse, as defined whether to or from foreign countries,  whether they move inter-state or intra state. But it must be  commercial intercourse and they must move’’ 

Trade is the activity of buying and selling or exchanging goods  and services between people or countries. It is the exchange of  goods, services or both, for money or other goods and services. 

Commerce is the exchange or buying and selling of commodities  on a large scale involving transportation from place to place.10It  is the buying and selling of goods or services, especially in large  amounts.11 It is the buying and selling of goods and services,  especially on a large scale, and the activities involved in the  production, distribution and consumption of those goods and  services.

Flowing from the above, trade and commerce concerns a definite  exchange of goods or services. In contrast, lottery is a venture of  chance without a definite guarantee that any form of value will  be exchanged. In lottery, purchase of tickets simpliciter does not  make every purchaser entitled to an exchange of value (prize  money) or any other form of consideration. Whereas, goods and  services move from one person to another and from place to  place in relation to trade and commerce, no goods or services move from one person to another or from place to place in  relation to lottery. Lottery is an activity of probability, without  influencing the definite utility of goods and services. 

For purchasers of tickets who do not win the prize money in  lottery, they part with the value given to secure the ticket but do  not receive anything in exchange for such value. Consequently,  such an act cannot be classified under trade and commerce which  pertains to exchange of goods and services for a consideration.  Where there is no agreement to a definite exchange, such activity  is not transactional in nature and thus cannot be modified to be  trade or commerce. To those whose tickets do not qualify for the  prize money, no goods or services move to them and as a result,  there is no form of exchange. 

It is therefore apparent that lottery is entirely distinct from trade  and commerce. Engrafting lottery into trade and commerce is  an intricate act that is tantamount to misinterpretation of the  provisions of the Constitution. To infer the inclusion of lottery  under Item 62, 67 and 68 of the Exclusive Legislative List is an  attempt to clothe the National Assembly with powers that it  does not have. 

The courts are only permitted to expound the meaning of  legislative provisions but refrained from expanding them.13 The courts are not allowed to ferret for meanings of provisions  beyond the law.14 A legislative authority that claims to legislate  in accordance with what the Constitution has enacted must  show how it derived its legislative authority to do so from the  Constitution itself.15 An inference to words not contained in the  Constitution can be said to be an extravagant interpretation  of the Constitution. Also, party to a suit has no legal right to  expand the wordings of a statute.

The Court considered some decisions of the Indian Supreme  Court as persuasive authorities on the subject matter when the  court held thus: 

“In the case of State Of Haryana Vs. Suman Enterprises & Ors (1994) 4 Scc 217 (1994) 4 SCC 217, the Supreme Court of India observed the following regarding lotteries: 

“A lottery is not a trade or commerce in the conventional sense.  It involves an element of chance and, therefore, cannot be  classified as a commercial transaction or business activity. The sale of lottery tickets, unlike trade and commerce, does not  involve an exchange of goods or services, but merely a game of  chance, which is a form of gambling.” 

Also, in BR Enterprises Vs. State Of Uttar Pradesh (1999)  9 SCC 700, the Supreme Court of India addressed the  question of whether lotteries fall within the scope of “trade”  and “commerce” as guaranteed under Article 301 of the  Constitution which ensures the freedom of trade, commerce  and intercourse throughout India. The Court held that lotteries  do not constitute trade, commerce or intercourse within the  meaning of Article 301. The Court reasoned that lotteries are  fundamentally a form of gambling and thus do not qualify as  trade or commerce. 

Given that the decisions referenced above reflect a sound  exposition of the law, I find them persuasive and shall  accordingly adopt their reasoning.” 

The Court then concluded in the following words: 

“In the light of the foregoing, I hold that lottery does not  constitute “trade and commerce” as envisaged under item 62(a)  of the Exclusive Legislative List as lottery is fundamentally a  game of chance lacking the certainty, mutual exchange and  reciprocity typically associated with trade and commerce.  Unlike traditional commercial transactions involving a defined  exchange of goods and services between parties, lottery merely  offers participants the prospect of winning without any assured  return or specific value in exchange. Therefore, a lottery cannot  be classified as ‘trade and commerce” under the relevant item  in the Exclusive Legislative List, as it fails to meet the criteria  of economic transaction involving the definite transfer of goods  and services.” 

Having found that Lottery is not a form of trade or commerce,  the Defendants could not successfully justify the National  Assembly’s enactment of a law to regulate lottery in Nigeria.  Consequently, the Supreme Court declared the National Lottery  Act, 2005 unconstitutional and proceeded to nullify the Act. 

It is our considered view that this decision reflects the  appropriate interpretation of the Constitution and the learned  Justices of the Supreme Court must be commended for the  sound decision.

Previous Nigerian judicial decisions on  the subject matter 

Before the recent Supreme Court decision under review, there  have been a couple of decisions of other subordinate courts  in Nigeria on the issue. In the case of Nigeria Employers’  Consultative Association (NECA) & Anor v A. G. Federation,17 the Court of Appeal (an intermediate court in Nigeria) held that  the National Assembly has the legislative power to legislate on  matters pertaining to lottery under Section 4 of the Constitution  and under Item 62, 67 and 68 of the Exclusive Legislative List. In  this case, the Court of Appeal held that there is no delimitation of  the National Assembly’s power to enact laws on lottery matters  neither is there a conferment of exclusive legislative powers on  the House of Assembly of a state concerning lottery matters.  The Court of Appeal further held that the National Assembly’s  legislative power is vast enough to enact the National Lottery  Act of 2005. 

In Association of Bookmakers v The National Lottery  Regulatory Commission & Ors,18 the Federal High Court (a  court of first instance in Nigeria) held that lottery is within  the Exclusive Legislative List in the Second Schedule to the  Constitution. The Court further held that the Lagos State  Lotteries Board, being the third defendant in the suit, cannot  regulate betting business in Lagos state via section 9 of the  Lagos State Lotteries (Amendment) Law, 2008. The Federal  High Court, relying on the case of Agbakoba v A. G Federation  & Ors19 held that the National Assembly can legislate on items  set out in the Exclusive Legislative List to the exclusion of the  House of Assembly of a state. 

It is important to note that while the former decision held that  the National Assembly’s legislative power can be interpreted  to include lottery, in the light of section 4 of the Constitution,  the latter pronounced that lottery matters fall within the ambit  of the Exclusive Legislative List, particularly Items 62, 67 and  68, which consequently makes the National Assembly the sole  authority to legislate on lottery matters. Item 62 concerns trade  and commerce while Items 67 and 68 are panoramic powers of  the National Assembly. Further findings will be discussed as  lottery being classified as part of trade and commerce. 

Regulation of lottery and gaming in  Nigeria prior to the supreme court  decision 

Prior to the recent Supreme Court decision, lottery and gaming  companies were subjected to dual licensing and regulations. By  this we mean that they had to obtain licenses from the National  Lottery Regulatory Commission then obtain another license  from the state lottery regulatory body of each state they seek to  operate in. This multiplicity of licensing and regulations placed  a heavy financial burden on lottery and gaming companies  because the licenses did not come cheap and they were subject  to periodic renewals. Beyond the issue of financial burden  was the challenge of meeting multiple regulatory compliances  required by both the federal and state regulators. 

Implication of the Supreme Court decision  Nullifying the National Lottery Act,  2005 

1. Exclusive state regulation of lottery: State Houses of  Assembly now have full and exclusive authority to legislate  on lottery matters within their states. This means that, for  states that already have their own state lottery regulations,20

the state regulator has full power and regulatory ambit over  all lottery matters (including licensing, etc.) within such  state. 

2. Implied nullification of existing licenses issued by  the NLRC: Although the Supreme Court did not explicitly  address the status of existing licenses issued by the NLRC,  it can be inferred that, with the invalidation of the National  Lottery Act, these licenses are now null and void, as the  power of the NLRC to issue those licenses stemmed from  the National Lottery Act. Consequently, lottery/gaming  operators who solely held NLRC licenses21 would need to  obtain licenses from individual states with established  regulatory frameworks, as they would likely now need  separate licenses for each state where they operate, rather  than relying on a single national license.

3. Uncertainty on the regulation of online  gaming: The regulation of online gaming  and the potential inter-state jurisdictional  conflicts they may create remains unresolved.  It is not currently clear whether a single state  lottery license would permit an operator  to offer online gaming/lottery markets to  customers residing in other states outside  the territory of the license issuing state.  This area is likely to be subject to further  regulatory or judicial pronouncements,  as online gaming, accessible across state  borders, is extremely prevalent and presents  unique challenges that may lead to additional  legal disputes and regulatory complexities.  Additionally, it would be difficult for the  other state regulators to restrict the online  gaming operator from offering their markets  to their residents, especially since individual  states in Nigeria do not regulate access to the  internet. 
4. Current status of the NLRC: The  status of the National Lottery Regulatory  Commission (the “NLRC”), in the light of  the Court’s decision, remains unclear. A  school of thought posits that it would now  automatically operate as a domestic lottery  regulator for the Federal Capital Territory  (the “FCT”). This view is premised on the  fact that the National Assembly serves as  the domestic law making body for the FCT.22 operators or regulate lottery activities across  the federation, including the FCT. This  position is premised on the argument that  the now-nullified NLA, enacted in 2005  by the National Assembly, was intended to  function as a federal law across all states  of the federation and did not contemplate  any limitation only to the FCT. According  to the proponents of this school of thought,  following the decision of the apex court, until  such a new law is enacted, lottery in the FCT  is unregulated. 

5. Status of states without domestic  lottery law, regulation or regulator: 

While some states already have laws  regulating lottery activities, the nullification  of the NLA creates a legislative gap in other  states. Lottery activities in states without  established regulatory frameworks will lack  oversight until relevant laws are enacted by  their respective State Houses of Assembly. 

Conclusion 

The legality of any law is relational to its  conformity to the provisions of the Constitution.  

There has been controversy over the issue of  exclusive powers to legislate on lottery matters.  

This has been resolved by the Supreme Court’s  decision. The Court’s decision is the current  position of the law with regard to the regulation of  lottery in Nigeria. This position of the law can only  change through a constitutional amendment. This  can be said to be the appropriate interpretation  of the Constitution. It remains to be seen how  lottery and gaming operators that operate in  multiple states in Nigeria will adapt to the current  regulatory framework. This may require some  form of restructuring of their operations. 

Thus, the National Lottery Act will now be  deemed to be domestic legislation for the  FCT. Another school of thought posits that  the NLRC has been rendered defunct, as  the nullification of the National Lottery Act  (NLA) invalidates the NLRC, which was  established under and derived its authority  from the NLA. Consequently, the NLRC no  longer has the legislative authority to issue  national or domestic licenses to lottery