The metaverse has gained popularity in the crypto space for providing another use case for cryptocurrencies, and similar decentralised ethos. It has also provided artists and art enthusiasts a space to create and trade in new forms of art, referred to as non-fungible tokens (NFTs). Gamers have also found a ready arena for real-time gaming in the metaverse. In the first part of this article, we reviewed federal gaming legislation in Nigeria. This concluding part will address state legislation.
Lagos State Lotteries and Gaming Authority Law 2021
In 2021, the Lagos State Government enacted a new gaming law, the Lagos State Lotteries and Gaming Authority Law 2021 (“the Law”), which repealed the previous law and related regulations – the Lagos State Lotteries Law 2004, the Lagos State Lotteries (Amendment) Law 2008, Casino and Gaming Regulatory Authority Law 2007, Casino and Gaming Regulations 2008, Pools Betting Control Law 2003, and the Pools Betting Tax Law 2003.
The Law in turn introduces a new sleuth of subsidiary regulations – Responsible Gaming Regulations 2021, Casino and Gaming Regulations 2021, Online and Retail Gaming Regulations 2021, and Remote Gaming Regulations 2021. As their names suggest, they provide a legal framework more amenable to online gambling platforms.
The Law introduces several categories of licenses, allowing licensees to acquire more than one license. These license categories are casino, bingo, pool betting, sports betting, lottery, combined licenses, agent or affiliate, sweepstakes, slots or gaming machine, car racing, horse racing, other games, other lotteries (private lotteries, charitable lotteries, society lotteries, promotional competitions), scratch card, remote gaming, and amusement machine.
These license categories show that the Lagos Law is more gamer-friendly than the National Lottery Regulations, as it explicitly permits licensing for some gaming activities that are outrightly banned under the national regulation. It would thus be advisable for the prospective operator that wishes to leverage online tools to deliver their services to secure license(s) in Lagos. Leveraging the metaverse and other online applications, they can deliver gaming services beyond Lagos to other parts of the country.
The Authority under the Law can also issue new license categories that are closely related to those stated under the Law. They can also issue permits for activities that fall under other games, but do not require a license.
The definition of a ticket under the Law also encompasses tokens. As such, the licensees in the Lagos Law may issue a single virtual token, which will also qualify as a ticket, unlike under the Regulations where it is advisable for both to be separate. The minimum share capital for a prospective licensee under the Law is N20,000,000.
Earlier, it was mentioned that the Gaming Machines (Prohibition) Act 1977 prohibited the use of gaming machines and imposed penalties for their use. The Lagos Law however permits their use, subject to registration with the Authority or a certified institution. Other equipments that should be registered are lottery terminals, pool betting terminals, gaming terminals, gaming platforms, gaming tables, and any other gaming equipment system or software as the Authority may deem necessary.
Licensed operators who deploy the metaverse to deliver their gaming services may thus be required to register the underlying software applications used to run their operations. When registered, the approval will last for a period of five years. A licensee is then expected to maintain and keep all registered equipment in a suitable condition.
Licensees are prohibited from offering credit or any form of arrangement that assists or induces anyone to increase their participation in a gaming activity.
The Law spells out the scope of online and retail gaming as meaning betting operations that include but are not limited to pool betting, public online lottery, online sports betting, virtuals, online casino, keno and all or any form of gaming requiring the use of computer programming, randomisers, totalisators, etc., and any betting service offered through the web mobile, gaming terminals retail shops. However, any licensee involved in the casino trade must incorporate the word ‘casino’ into their naming
A worrisome provision of the Law is the power it gives inspectors to enter the premises of a licensee without prior notice to inspect the available gaming operations, inspect gaming machines and equipment, records, documents connected to gaming activity, examine, make copies or take extracts, and request for explanations from the licensee or the person in charge of the premises as regards any document. While this provision may be intended to ensure that licensees maintain the conditions of their license, the lack of prior notice may give room for abuse by overzealous officials.
Responsible Gaming Regulations 2021
The Responsible Gaming Regulations 2021 (“the Regulations”) introduces a formal set of ethical principles that all licensed operators should comply with. It defines responsible gaming as acceptable standards that licensed gaming operators, software suppliers and associated service providers need to uphold to ensure their offerings meet the standards of a fair and safe gaming experience that protects players from the adverse consequences of gaming.
It also provides for self-exclusion, a measure to protect gamblers who voluntarily wish to be restricted from gambling. This could be done to recover from addiction or simply to curtail time and other resources spent on gambling and gaming. When a person registers on the self-exclusion list, the provider is required to comply with their wishes and restrict their access to the gaming platform, whether online or physical. For metaverse gaming operators, this may involve freezing or suspending the access of the player to the platform. Self-excluded persons must also not receive any advertisement, promotion, or targeted mailing relating to gaming activities.
Licensees, their agents or affiliates are to post visible signs on their facilities or remote platforms warning against underage gaming. These signs should be at the entrance, exit, credit locations, websites and other online platforms. Metaverse gaming platforms can comply with this provision if the notice is provided in their terms and conditions, on their sign-up page, before a game is commenced, and where payment is required, before processing payment details of the gamer.
Licensees are also subject to advertising regulations stated in the Regulations and those issued by the Advertising Regulatory Council of Nigeria (ARCON). Nineteen advertising restrictions are spelt out in the Responsible Gaming Regulations which include: encouraging any person to contravene a gaming law; showing underage or vulnerable persons gaming; portraying, condoning, or encouraging gaming behaviour that is socially irresponsible or could lead to financial, social or emotional harm; and suggesting that gaming can enhance personal qualities, and links gaming to seduction, sexual success or enhanced attractiveness.
Remote Gaming Regulations 2021
Remote gaming is defined as a game in which persons participate through the use of the internet, telephone, television, radio, electronic device or other technology for facilitating communication and includes pooled prize gaming, where all or part of the money paid to play the game, known as the gaming fee, is paid into a pool from which the prizes are later paid to the winning players.
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The metaverse qualifies as another technology for facilitating communication. Licensees under this category are only to serve Lagos-based customers, termed state customers under the Regulation. Ascertaining that a person is a state customer under the Regulation rests on the updated and audited records maintained by the remote gaming provider.
Proof that a person is a state customer includes the following: the registered address of the player at the time of play; verified information of the player by the remote gaming provider where the player provides a non-Lagos State address; where verified information is found to be conflicting (for instance, address on NIN slip and Passport are different), residency in Lagos can be determined by bank statement, driver’s license, Lagos State Residents Registration identity card, national identity card or utility bills.
However, Rule 4(b) of the Regulation introduces a notable exception that may serve as a window for remote gaming providers licensed in Lagos to serve customers in other states of the federation. It states that where at the time of play, no address is provided, the player shall be registered as a state customer. It is however unclear whether the player will always be allowed to play without providing an address, or restricted after a certain number of plays, as the Regulation is silent on this.
The remote gaming provider is expected to register with the Authority within 31 days before commencing operations, subsequent upon which, they will be issued a license. Upon commencing operations, the remote gaming provider is required to pay a gaming fee, referred to as Good Causes Money, which will be calculated based on the relevant gaming license category – the licenses earlier referred to in the discussion about the Law. For instance, if it is a pool betting license, the Good Causes Levy is a monthly fee of N150,000. For casino licensees, the levy is 5% on gross gaming revenue.
Generally, the Good Causes Money is chargeable on revenue. Failure to pay this gaming fee will result in a penalty of 10% on the gaming fee for each day the default continues. However, the penalty will not exceed double the amount of the gaming fee payable. Allowing a player to participate freely in a game that involves winning prize money will not exempt the provider from paying the relevant gaming fee. Monies generated from the Good Causes Money are paid into the Good Causes Fund. This Fund receives monies accrued from license fees, other levies and penalties, grants, and proceeds from investments.
After deducting 10% from the Good Causes Fund to meet its recurrent or operating expenses, the Authority will apply the remaining funds in the following manner: 20% for expenditure on or connected with infrastructural objectives of Lagos State; 15% for expenditure on or connected with environmental objectives of the state; 20% for expenditure on or connected with social security and health-related objectives in the state; 15% for expenditure on or connected with educational objectives in the state; 10% to the Lagos State Sports Trust Fund; 10% for expenditure in respect of any other matter approved by the Governor for that purpose; 5% to the Lagos State Neighbourhood Safety Corps Agency; and 5% to the Lagos State Security Trust Fund.
Recommendations
The Gaming Machines (Prohibition) Act should be repealed as it limits the offerings of physical and remote casinos in Nigeria.
The National Lottery Act and Regulations should be reviewed to accommodate remote and online gaming, taking a cue from the Lagos regulations.
The restriction imposed on video gaming for cash under the federal legislation in Nigeria may serve as a disincentive for prospective licensees, who may prefer the Lagos licensing framework. Permitting video gaming will not only increase the value of the national license but can also provide a potential use for eNaira, in line with the cashless policy of the government.
While the Casino Gaming Regulations 2021 permit the provision of credit subject to ascertaining creditworthiness, it does not provide safeguards around this, to ensure that licensees do not provide credit to a customer who has a high risk of default or ought to be self-excluded, under the Responsible Gaming Regulations 2021. An amendment should expressly require that credit must not be extended to high-risk customers and those ordinarily qualified for self-exclusion.
The Responsible Gaming Regulations could consider using illustrative examples to explain the kinds of advertisements that should be not applied.
The Responsible Gaming Regulations 2021 should be reviewed to expressly require that gaming platforms are used for only that purpose. Doing so will ensure that licensees do not offer additional services to serve as lure to their main gaming services.
Inspections should require prior notice, or where notice will be waived, it should be made pursuant to a court order, where it is proven that prior notice may give the licensee or owner of premises, the opportunity to hide or destroy evidence.
Conclusion
This article has considered gaming legislations in Nigeria and their impact on metaverse gaming. No direct reference to the metaverse was detected, but some regulations offer a broad category like remote communications or remote gaming that can capture the metaverse. Federal gaming legislations in Nigeria are not attuned to modern realities, while Lagos State offers gaming laws that are more accommodating to metaverse gaming.
There is real industry interest in building metaverse gaming platforms for a ready audience. The major stumbling block would be the regulatory framework. Improvements here will better position Nigeria to tap into the economic opportunities that the metaverse offers.
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