Law News
National Lottery Act: How not to implement it


Director-General, National Lottery Regulatory Commssion, Adolphus Ekpe

Lottery, like other ideas we borrowed from other jurisdictions, is a creation of statute. In England, a statute of 1698 provided that lotteries were, by default, illegal unless specifically authorised by a statute. A 1934 Act was further liberalised in 1956 and in 1976 small lotteries were legalised. Its operation became national in the United Kingdom and the Isle of Man. It was operated by Camelot Group to whom the licence was granted in 1994 and 2007. The lottery was regulated by the National Lottery Commission and was established by the then British Prime Minister, John Major, in 1994. To take maximum advantage of what lottery should be and how it should be operated, when London won the bid to host the 2012 Summer Olympics, Olympic Lottery scratch cards were launched on July 27, 2005 under the brand name “Go for Gold”.

From the UK and the US, it is clear that lotteries were established by the government to either raise funds for a specific project or to augment state revenues or to support educational system. In whichever way, tickets were offered as part of lotteries to enable interested parties participate therein.

Likewise, the National Lotteries Act, 2005 brought to life The National Lottery Regulatory Commission as signed into law by former President Olusegun Obasanjo on March 30, 2005.

Section 57 of the NLA defines “lottery or lotteries” to include “any game, scheme, arrangement, system, plan, promotional competition or device for the distribution of prizes by LOT or CHANCE, or as a result of the exercise of skill and chance or based on the outcome of sporting events, or any other game, scheme, arrangement, system, plan, competition or device, which the President may, by notice in the gazette, declare to be lottery and which shall be operated according to a licence…”.

Lottery in ordinary meaning is “a means of raising money by selling numbered tickets and giving prizes to the holders drawn at random”.

A community reading of sections 17, 18, 19, 21, 23 and 25 of the Act are on the operation of the national lottery, especially section 19 (1) which reads that, “The President may grant licence to any person or corporate body to operate a national lottery or any lottery, by whatever name called…”

Are the operators of the National Lottery Act implementing the provisions of the statute? The immediate answer is in the negative. What was the NLA created to elicit? What is the state of the National Lottery Trust Fund created by the National Lottery Regulatory Commission? It now seems that the NLRC has almost completely deviated from its mandate of birthing and engendering a viable lottery industry to pursue easy forays in other spheres which are outside its remit.

One immediate case in point to illustrate this is the creative stretch of the NLRC towards ‘regulating’ Consumer Sales Promotions of private sector businesses especially in telecommunications, banking, manufacturing, broadcasting, etc.

To all intents and purposes, CSPs by definition are a variety of short-term promotional techniques to encourage customers or consumers to respond in some way. A sales promotion is a typical marketing technique that adds values to a product in order to achieve specific marketing goals. In these categories of CSP are some of the companies that engage in short-term promotions which operations are not within the contemplation of the drafters of the National Lottery Act.

It is argued that the act of the NLRC in issuing letters alleging ‘breaches’ of the provisions of the NLA to some companies that engage in short-term promotions is illegal as can be gleaned from section 29 of the Act (Sales of Tickets). This section requires that it is mandatory that a ticket of any lottery under the Act shall be sold on behalf of a licensed company through personal applications postage or electronic transmission…”

It is my humble submission that companies conducting CSPs do not sell tickets, it is only additional value or incentive for patronising a particular product. The consumer is definitely not engaging in a lottery game as defined by statute because he or she already gets value for his money in terms of the product he or she has paid for.

Another salient point to consider is located in Section 24 of the Act (Application of proceeds of a National Lottery). Subsection one reads, “A licensee shall establish an operational fund to be known as the “prize funds” into which shall be paid a minimum return of 50 per cent of the proceeds of a National Lottery”, while subsection three states that “A licensee shall pay to the Trust Fund established under section 35 of this Act, within a period of not more than 90 days after the determination of the result of each lottery, an amount of 20 per cent of the proceed of the lottery for the first five years of the licence, 25 percent in the subsequent five years and thereafter 27.5 per cent”.

It is to be noted that companies or corporate bodies conducting CSPs do not sell tickets. Thus, there are no “proceeds” out of which they should pay a required percentage to the National Lottery Trust Fund. The NLA according to the drafters was ONLY to regulate lottery business and not marketing promotions of private business concerns.

Referring to Section 20 of the Act (duration of a licence) which, among other things, states that “a licence granted shall be valid for a minimum period of 10 years and a maximum of 15 years”. It is the contention of this writer that there is no valid reason why the NLRC should seek to coerce any company to apply for a licence for a CSP with a minimum duration of 10 years when the maximum duration of such CSP is just for a period of six months. Further, it shows that it was not in the spirit and letter of the Act that companies utilising one marketing strategy or the other for the purpose of pushing the sales of their products, should be applying for the lottery licence.

Pursuant to section 55 of the Act, the National Lottery Regulations 2007 was promulgated. Clause 10(2) of the regulations provides that “lotteries with short durations, periodic life span, seasonal existence and promotional lotteries of less than 10 years duration shall be operated pursuant to a value-permit granted by the commission”. Two acts of illegality come to fore here. First, it altered the provision of the Act by creating another class of lottery not known to the law and second, it is against the provision of the Act to confer on the NLRC the power to grant lottery permits. The attempt to expand the scope of coverage of the commission by the instrumentality of the regulation to include granting short-term permits in place of a licence is not within the contemplation of the Act and therefore it is illegal and invalid. By extension, there is no power granted to the NLRC to seal up any business premises in the Act.

Realising the lacunae in the 2005 Act, the commission is now proposing a parliamentary amendment of the Act that set it up instead of fully executing the mandate reposed in the Act. A look at Section 5.7 (1) (b) of the proposed amended Act shows an intention to include in the Act, as part of the functions of the commission, a section that reads, “Regulate the operation and business of promotional lottery in whatever form and whatever name called in Nigeria.” This clearly shows that presently, the commission does not possess such powers. This is a ploy to legalise all their illegal acts like writing to corporate bodies for violating the law on lottery. Several of the new areas being sought by the proposed amendment are already covered by existing institutions created by law including the Central Bank of Nigeria, the National Communications Commission, the National Institute of Marketing of Nigeria, the National Agency for Food and Drug Administration and Control, Consumer Protection Council, to name a few.

Given the foregoing, should the NLRC now be plotting a parliamentary amendment of the Act that set it up instead of fully executing the mandate reposed by the Act? I dare say that NLRC should be seeking to remediate by making refunds of funds obtained illegally instead of seeking to legalise the illegal acts it had been committing. The lesson to be learnt is that all Nigerians must wake up and participate when both House of Assemblies and/or the National Assembly is engaging in the public hearings of bills.

But for now, from the above submission, the NLRC should know that this is not how to operate the NLA 2005.

Click here to read from source.