2017/18 Legislative Outlook: Sports Betting in Nigeria
Sports betting in Nigeria has grown in leaps and bounds in the last few years. While this growth has been exciting for the industry and the punters, there have been increasing attempts to introduce more regulation concerning the sports betting industry in Nigeria.
We at AIO have put together this brief report on the sports betting industry in Nigeria, the areas we believe new regulations are going to be introduced, and how this will affect the industry going forward. The report is a live document and we will be updating as and when there are changes. The report is arranged under different sections for ease of understanding.
There is currently a lot of debate in the sports betting industry in Nigeria around which level of Government has the power to regulate and administer the sports betting industry. Nigeria operates a Federal system of government and as a result both the Federal Government and the State Government have law making powers. Both the National Assembly and several State Houses of Assembly have made laws covering sports betting in Nigeria, and as a result there has been a power tussle between both as to the supremacy of the laws. This tussle has spilled into the courts and there are presently 5 separate cases on the matter in the courts in Nigeria. The most relevant however is the case at the Supreme Court between the Attorney General of Lagos State v Attorney General of the Federation.
There was a recent amendment to the Federal Law on lottery and sports betting in Nigeria, the National Lottery Act (Amendment) Bill 2017 which was refused Presidential Assent by Acting President Yemi Osinbajo in April 2017 on the grounds that the matter of legislative competence was pending before the Supreme Court.
The decision of the court is therefore highly anticipated. We will monitor this case as it progresses and will update this report once a decision is reached.
Data Protection is an area in Nigerian law where there has not been comprehensive regulation. The current active regulation is the Guidelines on Data Protection issued by the National Information Technology Development Agency (NITDA). The NITDA is the federal body charged with creating a framework for the planning, research, development, standardization, application, coordination, monitoring, evaluation and regulation of Information Technology practices, activities and systems in Nigeria. The NITDA Guidelines prescribe guidelines for organisations that obtain and process personal of Nigeria residents and citizens within and outside Nigeria for protecting such personal data.
There is currently a Data Protection bill which was passed by the House of Representatives in April 2017, and is now currently going through the legislative process at the Senate.
This Bill if enacted, will affect the way Sports Betting operators store personal data of punters as it creates restrictions which seeks to ensure that when data is transferred to a country or territory outside of Nigeria, the data controller needs to ensure that country or territory has adequate level of protection for the data being transferred.
We will continue monitoring the progress of this legislation at the Senate and will update this document when necessary.
Major operators in the sports betting industry in Nigeria use a combination of online and offline methods to attract customers. Sports betting companies use a network of retail outlets to spread their network. These retail outlets are structured on what is loosely referred to as an ‘agency network’, however the legal implication of those outlets are they are franchise stores.
There is currently no specific legislation governing franchise business in Nigeria. However, this is due to change in the coming months. The Franchise Bill was passed by House of Representatives in June 2016, and is now currently before the Senate. If this Bill is enacted, it will dramatically change the way sports betting operators can structure their franchise network. The most important change is that the Bill mandates that the franchisor must provide a prospective franchisee with a Disclosure document at least 14 days prior to the franchisee signing with the Franchisor. Key information that should be included in the Disclosure document include:
- Management disclosures: The names, business addresses, positions held, and business experience of any person who has senior management responsibilities for the franchisor’s business operations in relation to the franchise;
- Litigation disclosures: Any criminal convictions or any finding of liability in a civil action or arbitration involving franchises or other businesses relating to fraud, misrepresentation, or similar acts or practices of the franchisor for the previous five years, and whether any such action is pending against the franchisor or its subsidiary, and the court or other citation of any of the above.
- Operational disclosures: The total number of franchisees and company-owned outlets of the franchisor, and the names, business addresses and business phone numbers of the franchisees, whose outlets are located nearest to the proposed outlet of the prospective franchisee, but in any event of not more than 5 franchisees. Including information about the franchisees of the franchisor that have ceased to be franchisees during the three fiscal years before the one during which the franchise agreement is entered into, with an indication of the reasons for which the franchisees have ceased to be franchisees of the franchisor;
- Financial disclosures: An estimate of the prospective franchisee’s total initial investment, financing offered or arranged by the franchisor, if any, the financial statements of the franchisor and when available audited or otherwise independently verified financial statements, including balance sheets and statements of profit and loss, for the previous three years.
As can be seen, these requirements in the Disclosure document have the potential to fundamentally alter the relationship between sports betting operators and their ‘agents’. We will continue monitoring the progress of this legislation at the Senate and will update this document when necessary.
Currently the interests of the consumers within the sports betting industry are protected by the regulatory agencies. At the federal level this is the National Lottery Regulatory Commission, and at the state level this is the various State Lottery Boards.
Another organisation which has the mandate to protect the rights of consumers is the Consumer Protection Council (CPC). The CPC is an agency of the Government under the supervision of the Federal Ministry of Trade and Investment. It commenced operations in Nigeria in 1999. The CPC is presently the most powerful consumer redress and monitoring agency in Nigeria. However, this is due to change if the Federal Competition and Consumer Protection Bill is enacted. The Bill will establish 2 important bodies: the Federal Competition and Consumer Protection Commission (FCCPC) and the Competition and Consumer Protection Tribunal (CCPT).
The FCCPC will ostensibly replace the current CPC but will be given wider investigative and enforcement powers. The CCPT will act as a quasi-judicial body to which appeals from the decisions of the FCCPC and decisions of any sector specific regulatory authority in a regulated industry in respect of consumer protection matters, will lie.
Another key provision in this proposed legislation is that it stipulates a very steep penalty for instances where there has been a contravention of any consumer rights. It stipulates a fine of not less than N100m or 10% of the turnover of the business in the preceding business year in the case of a company, and potential liability of the Directors on conviction to a term not exceeding 5 years or payment of fine not exceeding N10m.
This Bill was passed by the House of Representatives in March 2017, and is currently before the Senate. We will continue monitoring the progress of this legislation at the Senate and will update this document when necessary.
This report was written by our Partner – Babatunde Ibidapo-Obe and he can be contacted on firstname.lastname@example.org or +234 706 957 0096 for any questions, feedback, or consultation concerning how to ensure your business is ready to meet these changes.