Nigeria exempts gambling and lottery stakes from VAT under new Tax Act

From 1 January 2026, gambling and lottery stakes in Nigeria are no longer subject to value-added tax (VAT), with the Nigerian Tax Act 2025 clarifying that wagers themselves are exempt while profits from gaming remain taxable.

Nigeria has formally removed gambling and lottery stakes from the scope of value-added tax under the Nigerian Tax Act 2025, which was signed into law by President Bola Ahmed Tinubu on 26 June 2025 and came into force on 1 January 2026.

Section 185(m) of the Act explicitly lists “money, stakes or securities, including interests in money or securities” as VAT-exempt items. A “stake” is defined as the amount placed on a game, meaning that amounts wagered on sports betting, online slots, video poker and lottery games – whether linked to real or virtual events – are no longer treated as consideration for a taxable service.

According to commentary from tax specialists and a summary by Nairametrics and PwC, the reform resolves long-running disputes between operators and tax authorities over whether staking activity constitutes a VAT-able supply. By explicitly excluding stakes, the Act aligns Nigeria’s regime with international VAT practice, where the mere transfer of money – such as placing a bet – is not taxed, while the operator’s margin remains within the income-tax net.

Crucially, the exemption does not mean gaming businesses are tax-free. Income from lottery and gaming operations continues to be taxed under corporate income-tax rules and sector-specific levies, and withholding tax on player winnings still applies under earlier regulations. An EY West Africa briefing notes that operators must continue to apply 5% withholding tax on winnings paid to residents and non-residents, alongside company income tax on their profits.

For licensed operators, the immediate operational impact is the need to reconfigure payment flows and invoicing so that the 7.5% VAT rate is no longer charged on stakes, but may still apply to ancillary items such as platform fees, service charges or commissions. For regulators and policymakers, the change is presented as part of a wider modernisation of Nigeria’s tax code: shifting the focus from taxing raw cash flows to taxing actual economic value added, while giving greater certainty to one of the country’s fastest-growing digital sectors.