Lottery, betting firms withhold Fed Govt’s N100b
4/6/2021 2:54:38 AM
THE National Lottery Trust Fund yesterday told the House of Representatives how lottery and betting firms rip off the country of several billion of naira.
The Fund told the House Committee on Governmental Affairs that over N100 billion was being illegally held back by operators in the lottery and betting sector as outstanding liabilities to the government.
Executive Secretary of the Fund, Bello Maigari, who made this known at a mediation meeting on the rift between Premier Lotto and Western Lotto on the ownership of a game called Ghana Game, said lottery operators and gaming firms have short-changed government of billions of revenue.
While saying that such operators and defaulting entities are prosecuted for gross misconduct and economic sabotage, Maigari said they were working with anti-graft agencies to recover the money being owed the government.
He said: ?"It is no longer a well-kept secret within lottery and gaming industry circle that the government is losing colossal revenue running into billions of naira ? given the lottery market size estimated at over N2 trillion.
‘’Our in-house assessment revealed that over N100 billion is being held illegally by lottery operators and betting companies as outstanding liabilities yet to be remitted to the Trust Fund.
"Our recent constructive and collaborative effort with the Economic and Financial Crimes Commission (EFCC) and the National Lottery Regulatory Commission is beginning to yield positive results.’’
At least for now, we can confidently affirm that lottery operators and gaming companies have short changed government of billions of revenues and it is only fair if these defaulting entities are prosecuted for gross misconduct and economic sabotage to the nation.
"As at date, the Trust Fund was able to receive a cumulative total of N11.2billion from inception (2005 to date). Current engagement with the EFCC yielded so far about N833 million, but we were informed more funds are being recovered by the Commission.
Our records also show that of the N7.8 Billion remitted to the Trust Fund by the core licensees, about N6.5 Billion representing about 84% of these proceeds were contributed by the Premier Lotto Ltd.
"It is very important to highlight the performance of this company, even though they are expected to do better than that at least they were able to make consistent returns over the years, otherwise the situation would have been more drastic and different.
Comparatively other operators like R & S Lotto with N700 million, Winners Golden Chance Ltd with N409million, Gab Lotto with N32 million and Western Lotto Nigeria Ltd. N67 million have also made contribution to the Trust Fund base on their market shares and total sales turnover."
Maigari said further that "the franchise obtained to operate Ghana games by Western Lotto Nig. Ltd is a good development in the sector because of its potentials to generate more revenue to government. It is similar to Euro millions, where such a product is played across Europe because of its appeal as jackpot.
"An issue for us in the Trust Fund regarding the operation of the Ghana Games is our concern on the terms of settlement between the parties involved.
We are of the view that whatever deal is being contemplated must respect the provisions of extant law and protect public interest (The details of our appraisal on this anticipated agreement is attached herewith for your consideration).
" For Nigeria to make a progress in her lottery market, the regulator, lottery business owners and entrepreneurs must keep to the spirit and letters of the enabling legislation, remain sincere and God fearing in their business dealings, encourage best practice and collaboration, curtail corruption and acts capable of undermining the growth and development of the sector, It is on record multiple taxation, Iegislations, threats, conflicts of interests, sharp practices, leakages and sabotage are the bane of the industry."
He said operators in the sector have continued to enjoy unreported revenues from business promotional lotteries, non remittance of appropriate statutory obligations, under payment of prizes and short changing players. It is therefore, the duty of this Committee to employ all.
"I would encourage law enforcement agencies, to go after defaulting and illegal operators so as to rid the system of bad eggs. In our part, we will do everything humanly possible to safe guard lottery as a national asset and continue to support the work of the committee to achieve success for public good especially in this mediation to resolve this stalemate."
The Nigerian Licenced Lottery Operators Forum (‘the Forum’) is a trade association for gaming companies licenced to conduct lottery business in Nigeria. Our objective is promotion and protection of operators and stakeholders in the lottery industry.
The forum’s attention was called to Western Lotto Limited’s purported franchise over Ghana games when its members received court processes in December 2019.
Prior to this time, Western Lotto did not engage with lottery operators or the regulatory authority- National Lottery Regulatory Commission (‘NLRC’) to notify of its purported franchise on Ghana games.
Instead, Western Lotto chose to institute an action against 24 lottery operators and NLRC while at the same time launch a media attack on fellow operators with baseless accusations.
It is our opinion that the purport franchise from National Lottery Authority Ghana (NLA Ghana) amounts to usurpation of regulatory function.
We recall that NLA Ghana paid a courtesy visit to NLRC and indeed Lagos State Lotteries Board a few years ago with the aim of claiming royalty for the use of Ghana games by Nigerian operators.
However, the NLA was unable to establish clear basis for computation of royalty neither could it make a convincing claim of its rights to revenue generated outside its primary jurisdiction- Ghana.
For the record, Ghana games like EuroMillions (European lottery) and Powerball (American lottery) are lotteries set up within specific jurisdictions.
However, it is common practice for these game numbers to be used by operators and players outside the jurisdiction once they become public.
This is not considered illegal as long as the operators using the numbers do not take/accept bet from the primary jurisdiction.
For instance, no Nigerian lottery operator accepts bets from Ghanaian players hence there is no violation of Ghana’s lottery laws. Also, Euromillions and Powerball are offered to Nigerian players without recourse to or expectation by the European and American promoters of the games.
Our understanding of Western Lotto’s purported franchise and claims is:
Insistence that fellow operators and competitors should seek approval / register with Western lotto to make use of numbers generated outside Nigeria;
Operators should connect to a ‘Ghana games’ server set up by Western lotto,
Operators should grant access to Western Lotto’s consultant who should have access to operators’ servers for audit purpose; and
Operators should pay Western Lotto royalty for the use of Ghana games.
These demands are not only autocratic but against best business practice; in addition to being unpatriotic to the Nigeria State, it amounts to an operator assuming a quasi-regulatory role over fellow operators. The pertinent question is what invention or value has Western Lotto added to the Games?
Our attention was called to attempts by Western Lotto to enter into Agreement with Ministry of Special Duties and by extension NLRC that will be presented as Terms of Settlement in the court matter with the intention to bind all operators. As lottery operators, we individually and collectively reject the Agreement and the basis of our objections are:
All 24 Lottery operators who are also defendants in the suit were not involved in negotiation that led to drafting the Agreement.
Western Lotto seeks to enter the Agreement and forced all lottery operators to accept the terms of the Agreement as binding.
The Agreement seeks to make operators subject to a third party ‘consultant’ who will perform regulatory functions.
A lottery operator will derive revenue from other operators’ business thereby creating a monopoly and quasi-regulatory authority.
The Agreement seeks to breach the provision of the law on revenue allocation of lottery proceeds.
Western Lotto’s terms of settlement proposed revenue allocation as follows:
Operators to retain sixty percent [60%] of the proceeds as "Prize Fund";
Operators to retain twenty percent [20%] of the proceeds for payments to principal and sub agents;
Operators to retain five [5%] of the proceeds towards meeting costs and expenses;
Operators to pay four [4%] of the proceeds for remittance to the National Lotteries Trust Fund; and
The balance of eleven percent [11 %] of the proceeds to be paid into the account designated by the Consultant
The revenue allocation is a clear breach of Section 23 of the National Lottery Act. Specifically, the allocation of 4% of proceeds to National Lotteries Trust Fund is a violation of the requirement for operators to remit 20% of proceeds to the Trust Fund.
Essentially, Western lotto’s wished-for revenue allocation means 11% of revenue generated within, from and by Nigeria will be disbursed to a Consultant (nominee of Western Lotto) and ultimately to a foreign jurisdiction- Ghana. Should this be acceptable to the government of a sovereign country?
Our argument is that revenue generated in Nigeria should be dedicated and payable to Nigerian government for the benefit of Nigerians.
The sudden desire of Western Lotto to enter into settlement is suspicious and raises question on the validity or legality of the purported franchise obtained from LMC (an agent of NLA Ghana).
Is Western Lotto seeking to use the regulatory authority to validate a defective title?
Has Western Lotto lost faith in the judicial system considering this was his first port of call?
Why are other parties (2nd to 25th defendants) to the suit excluded from deliberations on and around the terms of settlement?
Please note that NLA Ghana and its agent LMC make no contribution to the development of lottery in Nigeria and have no stake in the process of lottery management and business in Nigeria.
The popularity of Ghana games in Nigeria is a result of years (1986 – 2000) of hard work and collective effort of many operators and it will be inequitable to allow any individual entity to acquire exclusive ability to control these games.
If control is desired, it should be the regulatory body and not through a consultant, operator or third party to ensure fairness and transparency.
The Ghana games numbers are considered free-to-air as the numbers are freely available and used by many countries along the West African coast. No effort or value of any kind has been introduced by Western Lotto to the lottery process to warrant making him a beneficiary or recipient of royalty payment.
In view of the fact that NLRC and NLA Ghana were previously in discussions which broke down due to computation of each party’s entitlements, it is unpatriotic and immoral for an operator to seek to circumvent the regulator for self- serving purposes.
The only neutral arbiter in any industry is the regulator and lottery operators oppose the use of a consultant which will effectively be duplication of functions of the NLRC and unnecessary expenses to government.
The matter of remittance (or not) of royalty to Ghana is uncomplicated and devoid of technicalities that warrants appointment of a consultant. Such appointment will merely serve as a smokescreen for perpetuating shady deals.
It is important to place on record that the popularity and acceptance of Ghana games is premised upon the fairness, transparency and integrity of the games.
However, this has been fatally compromised in recent years when NLA Ghana’s resorted to practices that compromise the integrity of the Ghana games such as closing the games ahead of time, publicizing draw results before schedule and conducting draws in secrecy.
These anomalies have impugned the integrity of the Ghana games process and Nigeria or its operators and regulator should not be seen endorsing substandard and flawed games.
Rather NLRC in negotiating with the Ghana authorities should insist on restoration of transparency and integrity in the process of generating the numbers to boost confidence of stakers in the Ghana numbers.
We are aware that from inception of its business to date, Western Lotto has made no remittance to National Lottery Regulatory Commission or the National Lottery Trust Fund in clear violation of the provisions of the Lotteries Act. It will be a collective affront to other compliant lottery operators who have been performing obligations under the Act if NLRC enters into an exclusive agreement with Western Lotto to the detriment of other operators.
In law, it is said that ‘He who comes to equity must come with clean hands’- Western Lotto has demonstrated bad faith in its dealing with LMC Ghana and seeking exclusivity without notifying NLRC who could have provided guidance in the matter is not only underhanded but demeaning to Nigeria’s sovereignty.
In conclusion, Western Lotto has gained public repute as the operator that fails to pay winnings as due which adversely affects the fragile reputation of the lottery industry. Should such operator be empowered to dictate the offerings in the industry? Should such operator be seen at the negotiation table with the regulator? Should operators deduce that NLRC, its governing board and supervising Ministry are compromised given the facts on ground?
We wish to state as integral stakeholders in this industry that we will not stand by while our collective right is abused, and regulatory functions usurped by an entity that has made to contribution to the development of lottery in Nigeria.
It is our prayer that this Honourable Committee and by extension, the House of Representatives prevent the execution of the proposed Terms of settlement. The input of lottery operators as stakeholders and defendants in the matter should be sought and count towards resolution of this matter.