Lagos State Commences Enforcement of 5% Withholding Tax on Gaming Winnings

By 𝔸bdulrazak Tomiwa

Lagos State has begun enforcing a 5% withholding tax on all gaming and betting winnings. Announced by the Lagos State Lotteries and Gaming Authority, the policy requires licensed operators to deduct the fee immediately at the point of payout as of February 20, 2026.

The tax applies to a player’s net winnings, which are then remitted to the Lagos State Internal Revenue Service (LIRS). Winners receive their funds minus this statutory 5% deduction, shifting the responsibility of tax collection directly to the gaming platforms.

All licensed operators must update their systems immediately to comply with the new framework. This initiative is part of a state-wide effort to increase transparency, accountability, and tax compliance within the rapidly expanding and lucrative gaming sector.

In a move to strengthen regulation, players must now provide their National Identification Number (NIN) to operators. This “Know Your Customer” (KYC) requirement ensures that all winnings and tax deductions are tied to verified identities for proper documentation.

The 5% deduction serves as a tax credit for players, meaning it can be used to offset other personal income tax liabilities. This ensures that the gaming industry contributes to the state’s economy while allowing players to document their tax contributions.

This enforcement reflects the government’s push to formalize the gaming economy in Nigeria’s commercial capital. Operators who fail to implement the new deduction and remittance guidelines will face strict regulatory sanctions and penalties from the state.