acquire a license as a nigerian lottery operator

A PROJECT

PROPOSAL TO

ACQUIRE A

LICENSE AS A

NIGERIAN

LOTTERY

OPERATOR

JUNE 2016 NATIONAL LOTTERY

REGULATORY

COMMISSIONABUJA

EXECUTIVE SUMMARYOur understanding is that there exists a fundamentaldisparity in the areas of revenue generation, integrityand transparency within the Nigerian lottery industry.Our extensive research within the industry showsevidence that the National Lottery RegulatoryCommission (NLRC) should be earning more as well asLottery operators, corner shop retailers and the localcommunities at large. Our survey results has uncoveredthat the industry currently has an annual revenuepotential of N1.1trillion which is a far fetch from theestimated N350 billion for the year 2015. This leaves outan enormous N784 billion in un-amassed earnings andan estimated N157 billion deficit for the National LotteryRegulatory Commission.

BACKGROUNDThe National Lottery Regulatory Commission(NLRC) was established through the NationalLottery Act of 2005. The Commission was primarilyborn out of the need to regulate the operations oflottery business, promote transparency andaccountability in lottery; and protect the interestsof players, stockholders and the general public.

NLRC provides licenses and permits to those whowant to play lottery because to play the lottery,permission is required. NLRC also ensures theprotection of investors and stakeholders includingthe government

BACKGROUND

Another body also created by the Lottery Act of

2005 is the National Lottery Trust Funds, which is

part of the proceeds that come from lottery.

There are rules that guide the performance of

lottery; one of them is that a minimum of 50 percent

of any lottery proceeds must be kept aside as price,

while 20 percent must come to the trust fund so

that, at the end, you find out that 70 percent of the

proceeds from lottery goes back to the people.

BACKGROUND

Much more than is anticipated can happen when thereis integrity and transparency, which is one of the thingsthat the Lottery Commission must ensure in the

business.

When the general public play, they play because theyknow that there is integrity and transparency. Also theyplay because they know that part of the money isgoing towards charity. It will provide scholarship andsupport for sportsmen and women. In other words,they know that lottery has been used all over the worldto support good causes.

CURRENT CHALLENGES FACING

THE LOTTERY SECTOR IN

NIGERIA

Lack of transparency within Lottery operators

Little or no sensitization of the public on the existence

of the National Lottery and its benefits especially in

regards to economic development, charity and

community projects.

Poor publicity for Lottery winners

Insufficient technology infrastructure to keep on track

on lottery ticket sales by Lottery operators

Revenue £5.5

Billion GBP

Operating

income

£47.2

Million GBP

Net income £32.4

Million GBP

Number of

employees

750

• In the 1960s casinos and lotteries

began to re-appear throughout the

world as a means for governments to

raise revenue without raising taxes.

•Lotteries, like any form of gambling, are

susceptible to fraud, despite the high

degree of scrutiny claimed by the

organizers. Numerous lottery scams exist.

Some advance fee fraud scams on the

Internet are based on lotteries. The fraud

starts with spam congratulating the

recipient on their recent lottery win.

POSSBILITIES OF LOTTERY TO

THE COMMUNITY

Federal and state income taxes

are imposed on the winner.

Last year, ticket sales in New Jersey

topped $2.7 billion, putting a

staggering $950 million in state

coffers. (New Jersey, USA) .

Lottery dollars paid for 8.3 million

meals served at senior centers and

delivered to seniors’ homes.

22,700 hot meals for older residents

Helped to provide more than 26,600

prescriptions to older city residents.


THE COMMUNITY

• California lottery dollars are used to supplement funding to public

education on all levels from kindergarten through higher education.

• Georgia uses proceeds to fund specific education programs including

tuition grants, scholarships or loans at eligible Georgia colleges,

universities, or technical colleges via a HOPE scholarship; pre-

kindergarten programs; and capital outlay projects including computer

and other technological upgrades for schools, technical institutes,

colleges and universities. (1.6 million students have been able to attend

colleges through Georgia’s HOPE scholarship program and more than

1.3 million four-year-olds have attended pre-kindergarten)


THE COMMUNITY

GLOBAL HIGHEST TOP WINNERS Prize(local

currency)Lottery Country Winner Date Notes

$590.5m PowerballUnited

StatesOne ticket from Florida 18 May 2013

Largest sole winner,

84 year old Gloria C.

MacKenzie, collect

lump sum of $371m

$390mMega Million

s

United

States

One ticket each from New

Jersey and Georgia6 March 2007

World's

largest annuitized jac

kpot

$380mMega Million

s

United

States

One ticket each from Idaho

and Washington4 January 2011

$365m PowerballUnited

States

One ticket bought by eight

co-workers from a

Nebraska meat-processing

plant

18 February 2006World's biggest prize

from one ticket

GLOBAL LOWEST TOP

WINNERS

Prize(local

currency)Lottery Country Winner Date Notes

€37.6m National Lottery Germany

Won by a nurse

from North

Rhine-

Westphalia

7 October 2006

Largest German

prize and single

winner

₱741.1m Grand Lotto 6/55 Philippines

One ticket holder

from Olongapo

City

29 November

2010

Asia's largest

prize (€13m)

R$145m Mega-Sena Brazil

Won by one

ticket holder

from Brasília(Fed

eral District) and

one from Santa

Rita do Passa

Quatro (São

Paulo)

31 December

2009

South America's

largest prize

A$112m OZ lotto AustraliaFour winning

tickets

6 November

2012

Australia's

highest lottery

prize

CURRENT vs. POTENTIAL REVENUE

(billion naira)

0

200

400

600

800

1000

1200

PromoLottery

SMS Lottery POS Lottery Total

Current

Potential

OUR MISSION

‘’To increase annual lottery revenues

from N356 billion* (2015) to N650

billion (2018), N835 billion (2021)

and N1.1 trillion (2025)

consecutively through innovative

technology and sensitization of the

Nigerian public.’’

REVENUE GROWTH FORECAST

(47% average annual growth rate in billions

naira)

0

200

400

600

800

1000

1200

2015 2018 2021 2025

OUR STRATEGY

A- supplying hardware, software, and systemsintegration expertise

B - with responsibility for the communicationsnetwork

C- bringing experience in consumer marketing andknowledge of the world of corner-shop retailers.

D - knowledge of secure printing technology

E - selected supplier of applications software.

F - develop media campaigns via TV, radio, socialmedia, billboards,

OUR STRATEGY

webmobile TV Broadcast radio

billboards

Social media

Retail shops

OUR STRATEGY

Secure printing

application softwareLottery stand

TECHNOLOGY

Marketing and partnering skills should be matched by expertise in project management and

technological knowhow. IT infrastructure is a critical component in this industry.

As part of its commitment, any interested organisation will roll out a network of new terminals,

media screens and satellite dishes across its retailers – the largest, and fastest, lottery upgrade

of its kind in Africa. This will be followed by a rollout of 8,000 new full terminals and then 10,000

standalone Scratch card terminals with independent outlets making up the majority.

In retail, any interested organization should adopt ground-breaking Fast Pay’s service. It

enables players to store their game preferences on a re-usable card and play draw-based

games at the checkout.

Any interested organisation will lead the field of digital lottery innovation and e-commerce,

operating Africa’s largest online lottery in terms of sales. We will launch a major new online and

mobile platform, which will transform the way players interact with the National Lottery games

across all devices – especially on mobiles where, for the very first time, players are now able to

play Instant Win Games.

In addition, we introduced a first ever mobile payment option. Providing smart phone users with

a great ‘quick pay and play’ experience, it offers players even greater access and convenience,

and enhances The National Lottery’s existing online payment options.

BENEFITS OF OUR

STRATEGY

Fundraising for Security Trust Fund and Development Fund with FCDA

Improved revenue regeneration

Sensitization of the general public on the existence, community benefits and how-to-play on National Lottery

Partnership with Mobile Subscriber companies (GSM)

Collaboration between Lottery operators for transparency and integrity

Reduction of fraud and fake ticketing in lottery operations

EVERY N100

50% → Prize Fund

20% → Good Causes

20% → Government

5% → Retailers as Commission

5% → Lottery Company

4.5% → Lottery Company for Operating Costs

0.5% → Lottery Company for Profit

NIGERIAN SPORTS LOTTERY

PERMIT (SLP) REQUIREMENTS The National Lottery Regulatory Commission shall issue

a five (5) year Sports Lottery Permit (SLP) to a fit andproper body corporate with the objective of operating alottery business based on the outcome of sportingevents. The Permit shall be subject to the following termsand conditions.

All prospective Sports Lottery Operators (SLO) mustsubmit a formal enquiry letter to which the NLRC willforward these Terms & Conditions forthwith.

The NLRC will conduct a due diligence exercise toensure all information provided is complete and accuratebefore issuing a letter of approval.


PERMIT (SLP) REQUIREMENTSThe Applicant (SLO) must:

1. Submit a written application to the NLRC requesting an “approval-in-

principle” to register a sports lottery business in Nigeria. Such

application should be accompanied with the following:

A TEN THOUSAND NAIRA (N10,000) non-refundable bank draft

payable to the National Lottery Regulatory Commission.

A copy of the proof of the “name reservation” from the Corporate

Affairs Commission (CAC).

2) Register Company with a minimum share capital of THIRTY MILLION

NAIRA (N30,000,000) with its core objectives as the operation of

sports lottery in Nigeria.


PERMIT (SLP)REQUIREMENTS

3) Upon completion of registration with CAC, submit a written application for

a licence accompanied with the following:

I. A non-refundable application and processing fee of TWO MILLION

NAIRA (N2,000,000) in bank draft made payable to the NLRC.

II. Proof of Registration (CAC certificate of incorporation)

4) Complete and return permit application form with the following:

I. Memorandum and Articles of Association

II. Clearance letter from the Economic and Financial Crimes Commission

(EFCC) and the Nigerian Police Force.

III. Bank guarantee from a reputable Commercial Bank, stating that “at all

times you will meet up to the obligation of prize redemption request from

winners on your platform to the tune of TWO HUNDRED MILLION

NAIRA (N200,000,000).

IV. Evidence and details of source of funds.

V. Evidence and details of source of funds.

VI. Bank authorisations to grant NLRC access to all business

transactions.

VII. Business Plan detailing but not limited to the following

(marketing plan, lottery industry analysis of the tyres of

games to be played, price structure of tickets, number of

draws, applicant’s game rules, capital budget and financial

plan).

VIII. Address of Registered Office, Branches, Planned locations

and Agents.

IX. Description of Operations and Management Structure.

X. All third party Agreements/Contractors to be reviewed, which

may be approved or rejected by the NLRC (SLA agreements,

Software agreements, Join venture Agreements).

NIGERIAN SPORTS LOTTERYPERMIT (SLP) REQUIREMENTS

XII. The Terms and Conditions for participation in all games.

XIII. A 3-year Tax Clearance Certificate of all directors.

XIV. All schemes/games/activities to the NLRC for test run before

launch.

XV. Software Certification – National Office for Technology

Acquisition and Promotion (NOTAP) (if applicable)

5. Proof of Registration of trademarks and domain names with

Nigerian Internet Registration Association.

6. Provide qualification information of key staff (ICT MANAGER,

ACCOUNT MANAGER, HUMAN RESOURCES MANAGER,

CUSTOMER CARE MANAGER)

7. Pay the Sports Lottery Permit fee of ONE HUNDRED

MILLION NAIRA (N100,000,000), within 30-days of receipt of

notification by the NLRC.

NIGERIAN SPORTS LOTTERYPERMIT (SLP) REQUIREMENTS

NIGERIAN SPORTS LOTTERY PERMIT (SLP)

REQUIREMENTS8) Sign the Sports Lottery agreement to abide by the rules and

regulations governing Sports Lottery operation in Nigeria.

9) All existing license who wish to obtain a Sports Lottery permit

must in addition to requirements 3 to 6 above, also:

I. Submit bank statements of the 2 years.

II. Submit evidence of increase of share capital to N30,000,000.

III. Submit evidence of up-to-date annual returns.

POST SPORTS LOTTERY PERMIT TERMS &

CONDITIONSThe SLO must:

1. Ensure participation age is 18 years and above.

2. Provide:

A SLO website URL and advert material(s) in hard and soft

copy for upload to the commission website.

Ensure the Commissions’ URL is present on SLOs’ website

3. Submit to the NLRC central server:

4. Daily Data detailing total entries, wins, losses and pay-out(s).

Where the applicant has an external technical consultant

managing the operation/transaction, the consultant must be

authorised to submit daily data.



1. Ensure participation age is 18 years and above.

2. Provide:

A SLO website URL and advert material(s) in hard and soft

copy for upload to the commission website.

Ensure the Commissions’ URL is present on SLOs’ website

3. Submit to the NLRC central server:

Daily Data detailing total entries, wins, losses and pay-out(s).

Where the applicant has an external technical consultant

managing the operation/transaction, the consultant must be

authorised to submit daily data. In the event of a manual

process, the daily scheme activity reports must be submitted to

the NLRC.



4. Pay a sports permit annual subscription fee of N2,000,000

5. Pay an operating fee of 4.5% of monthly proceeds to the NLRC.

6. Remit 20% of quarterly proceeds to National Lottery Fund for

good causes.

7. Ensure to meet all obligations to players on your platform,

8. Submit evidence of monthly operating fee remittance/Submit

evidence of remittance of 20% of proceeds to National lottery

trust Funds for good causes.

9. Submit evidence of remittance of 20% of proceeds to National

Lottery Trust Fund.

10. Submit an Annual Audited Financial Report.

POST SPORTS LOTTERY PERMIT TERMS

& CONDITIONSThe SLO must:

4. Submit an Annual report not later than 6 months after the end of

each reporting year, the SLP will be suspended if this annual

report is not submitted by the stipulated period.

5. If new agreement are entered under the period under review. All

third party Agreements/Contracts to be reviewed, which may be

approved or rejected by the NLRC (SLA agreements, software

agreements, joint venture agreements)

6. Ensure that the Sports Lottery Permit (SLP) shall not be used to

commit fraud or support any criminal act.

7. SLO must always revert to the Commission before entering into

any form of Agency/Franchise agreement(s).



4. Submit an Annual report not later than 6 months after the end of

each reporting year, the SLP will be suspended if this annual

report is not submitted by the stipulated period.

5. If new agreement are entered under the period under review. All

third party Agreements/Contracts to be reviewed, which may be

approved or rejected by the NLRC (SLA agreements, software

agreements, joint venture agreements)

6. Ensure that the Sports Lottery Permit (SLP) shall not be used to

commit fraud or support any criminal act.







5. SLO must ensure office location is a minimum of 400 metres

away from the office an existing SLO.

6. To ensure the interest of the stakeholders and participants are

protected, the NLRC review and duly approve any franchise

agreement before it is implemented.

KEY PERFORMANCE INDICATORS

Available information on website for successful

projects initiated by lottery fund including education

(scholarships) and sponsorship, infrastructure

development etc.

Increased sale of tickets

Transparency and Accountability (E-lottery)

Partnership with GS

First time players

Legitimately compensated winners

CONCLUSION

There are rules that guide the performance of lottery and our

company aims to maximize the earning potential of these

already existing rules.

We also aim to sensitize the general public play on the

possibilities of playing the lottery and provide assurance of

integrity and transparency and donations to charity.

Through innovative technology and media strategy our vision

is to improve the National Lottery revenue by an average of

47% yoy until 2025.

THANK YOU