Nigeria to offer remote operator licence after striking tech deal to collect gambling taxes
The Nigerian government has struck a deal with UK-based fintech company E-Technologies to help modernise its tax collection procedures for online gambling.
The agreement will see the Federal Inland Revenue Service of Nigeria utilise E-Technologies’ National Payment Gateway software called Sentinal, a technology system that instructs integrated providers to deduct taxes at the point of transaction.E-Technologies CEO David Kicks said: “Governments in rapidly developing nations are struggling to keep pace with the evolution of eCommerce and the ascent of mobile transactions.
“E-Technologies was created specifically to address this issue and we have built an incredibly strong team with unrivalled expertise across fintech, eCommerce and iGaming.”
The project will launch in collaboration with the National Lottery Regulatory Commission of Nigeria as it seeks to attract tier one international online gambling operators to the market.
Prospective operators will be invited to apply for a five-year permit to offer online gaming and sports betting services to Nigerian consumers.
Approved operators will then connect to Sentinal, where gaming duty will be deducted from player deposits and sent to the government treasury in real time.
E-Technologies CEO David Kicks: “This landmark deal will herald a new era in rapidly opening new regulated markets for responsible gaming operators, as grey market operating becomes increasingly problematic.”
“We are thrilled that the Nigerian government has made the decision to integrate our Sentinal system, empowering them to streamline online taxation,” said Kicks.
“By understanding better how the payments ecosystem behaves and evolves, we can drive a paradigm shift towards a point of consumption tax methodology.
“This landmark deal will herald a new era in rapidly opening new regulated markets for responsible gaming operators, as grey market operating becomes increasingly problematic,” he added.
Operators will pay an initial $100,000 to receive the remote operator permit, followed by an annual fee of $50,000 over the next four years.
They will also need to comply with a risk-based AML screening and must pass a “fit and proper” test for responsible gambling to be considered for a licence.The permit will allow international operators to legally offer online gambling services to Nigerian players without the requirement for a localised presence in the country.
Mohammad Nami, executive chairman of the Federal Inland Revenue Service of Nigeria, said: “The world is entering a challenging time where there is a strong obligation on governments to increase tax revenue as a percentage of GDP so as to provide much needed funding for local infrastructure and public services.
“Nigeria needs to innovate and harness technology to ensure that online transactions are taxed and accounted for.
“We have been very impressed with the Sentinal system which allows us to not only collect tax revenues at source, but also provides us with tax reporting and monitoring tools in real-time. The system will integrate with our own TaxPro Max portal,” he added.
Online gambling in Africa has become an opportunity too big to ignore for many leading international operators.
Stockholm-listed Betsson entered Nigeria in July following the acquisition of a 60% stake in local sportsbook Betbonanza, while 888 marked its Africa launch earlier this month by going live in four countries: Kenya, Tanzania, Mozambique and Zambia.
Through its deal with E-Technologies, Nigeria has taken steps to address a structural dilemma faced by many African countries through the efficient collection of gambling taxes.
Mohammad Nami of the Federal Inland Revenue Service of Nigeria: “The world is entering a challenging time where there is a strong obligation on governments to increase tax revenue as a percentage of GDP.”
Zimbabwe, for example, is looking to amend its existing Gambling Act by the end of 2022. The country is currently engaged with technology providers over how to effectively collect revenue and gaming duty from within a regulated market environment.
Lanre Gbajabiamila, director general of the National Lottery Regulatory Commission of Nigeria, added: “Online gaming continues to grow rapidly in Nigeria, particularly on mobile, and the adoption of E-Technologies’ Sentinal National Payment Gateway is a huge step to allow us to capture gaming duty at source.
“We are welcoming all responsible offshore gaming operators to apply for a remote operator permit as long as they pass all the relevant criteria including full AML screening and responsible gaming practices.
“We are proud to be the first country to adopt the Sentinal System and we believe it will bring a real national benefit to Nigeria,” he added.