Five Big Questions About Nigeria’s Gaming Industry Under Cooperative Federalism
Iyke Bede unravels the phrase cooperative federalism, which is being canvassed by the Federation of States Gaming Regulators of Nigeria (FSGRN), which proposes that states set and enforce their own gaming laws while aligning on shared frameworks based on local realities
Before November 2024, the Nigerian gaming industry was saddled with a 16-year jurisdictional battle between state and federal regulatory bodies. With its ruling that month, Nigeria’s Supreme Court made it crystal clear that all gaming activities (lottery, gaming, casino) are a residual matter that falls under state control.
Despite this clear, decisive ruling, attempts have been made to reanimate the National Lottery Regulatory Commission (NLRC) through the Central Gaming Bill proposed by some stakeholders and politicians. The new bill will oversee online and international gaming affairs, touting the bill as a tool for uniformity across the industry.
But is central control really the answer? The Federation of State Gaming Regulators of Nigeria (FSGRN) recently stepped in with an open letter addressing the Nigeria Governors’ Forum on why cooperative federalism is the way forward — why it is the global best practice to adopt rather than a structure where operators do not understand where state regulators’ powers begin and where the federal regulatory body ends.
What does cooperative federalism mean for Nigeria’s gaming sector?
Under cooperative federalism, states set and enforce their own gaming laws while aligning on shared frameworks based on local realities. This results in more efficient enforcement and better outcomes for stakeholders. The body makes the argument that the decentralised system is adopted by some of the biggest gaming markets: USA (Multi-State Lottery Association), Canada (Interprovincial Lottery Corporation), Germany (Glücksspielstaatsvertrag and Glücksspielbehörde der Länder), Switzerland (GESPA), and India, where each state is granted exclusive purview.
Additionally, with current realities of gaming not supported by all states in Nigeria, states that promote gaming, through the state regulatory model, earn the full benefits of good causes in the long run, as opposed to a centralised system that distributes resources to those that do not support gaming but earn the full benefits.
With local knowledge of the clime, each state can better handle issues of responsible gambling and enforcement. Whereas, in the centralised system, a one-size-fits-all approach poses a challenge of not capturing the nuances of each state, thus making it a less effective approach. Localised regulation ensures that resources are allocated effectively, addressing specific regional challenges and opportunities within the gaming sector.
Will every state benefit equally from gaming revenue?
It’s simple. States that ban gaming can’t expect to benefit from gaming revenues generated elsewhere. In the US model, states like Utah prohibit all forms of gambling and do not share in the gaming revenues generated by other states. If a state refuses to legalise betting, it should also not expect to share in the proceeds of lotteries. This means that where gaming is legalised, there will be a concerted effort to grow the industry organically and raise revenue for the state.
A stable and predictable regulatory environment, bolstered by cooperative federalism, can attract both domestic and international investments into the gaming sector.
What does this mean for the Supreme Court ruling?
The Supreme Court’s 2024 ruling affirming that lotteries and gaming are residual matters within the legislative authority of state Houses of Assembly has reinforced the constitutional rights of states to regulate gaming activities. This decision aligns with the principles of cooperative federalism, where states collaborate while retaining their autonomy.
While there is a push for the Central Gaming Bill, it necessarily does not change the ruling — albeit the bill seeks for online gaming and international gaming to fall under federal jurisdiction. The possibility of that materialising would require unprecedented luck.
What are the risks if states don’t step up?
A lack of collaboration and establishing a sense of oneness among states would create loopholes that may lead to some aggrieved states clamouring for a federal system. While no two states would operate the same way, the states must work towards creating ground rules.
The fight for regulation between state and federal took 16 years, so if the states fail to effectively roll out regulations, especially as it concerns underage gambling and fraud, those pushing for a centralised system will build a case juxtaposing the gaming clime when it was under federal reins and state control. This chaos is not attractive to investors.
What should the future look like for Nigeria’s gaming industry?
The FSGRN should peek into the playbook of countries it cites in its open letter to understand why the system works and apply it with a nuanced approach to the Nigerian gaming industry. While the battle for states to control their activities is won, the war of figuring out how to effectively implement its plans while maintaining harmony is ahead. Hence, collaboration should not be compromised, ensuring room for all states to have equal voice, with decisions based on equity and not revenue size. After all, the Supreme Court ruling should be seen as an opportunity and not a reason to fragment the industry.
By and large, cooperative federalism might sound like a fancy word, but in reality, it goes beyond giving states the power to shape their gaming futures. It also places a boulder of responsibility on their shoulders.
In this new dispensation, only states that invest in proper regulation and smart use of gaming revenues will win. States that fail to regulate effectively will be left behind in revenue and relevance.
