Business
States control of lottery rekindles push for fiscal federalism
…as govs mull taking fight for resource control to Supreme Court
The recent ruling by the Supreme Court of Nigeria nullifying the National Lottery Act 2005 that gave the power to oversee the nation’s lottery and gambling industry to the Federal Government has rekindled the agitation for restructuring in the country, with calls for fiscal federalism becoming louder.
The landmark ruling by the apex court, Business Hallmark gathered at the weekend, has opened the eyes of many state executives and ethnic leaders to a less complex way of resolving the vexed issue of political and fiscal restructuring, with many becoming convinced they can wrestle back the control of their resources through judicial pronouncements.
The Supreme Court had in a landmark decision on November 25, 2024, nullified the National Lottery Act passed into law by the National Assembly in 2005, insisting state governments alone have the authority to regulate lottery and gaming activities across the country.
A seven-member panel of the apex court, while voiding the legislation, argued that the National Assembly lacked the constitutional power to enact laws governing lottery and gaming.
Reading the unanimous judgment of the seven-member court, Justice Mohammed Idris said the powers to regulate lottery and games of chance reside exclusively with the state Houses of Assembly.
According to Justice Idris, the judgment effectively renders the National Lottery Act 2005 inoperative in all states, except the Federal Capital Territory (FCT), where the National Assembly has the power to make laws.
The quest to control the nation’s gaming industry, BH findings revealed, has been on for years between federal and state authorities.
In defiance to the National Lottery Act 2005, which gave the National Lottery Regulatory Commission (NLRC) the power to issue licences, regulate the sector and collect taxes for the Federal Government, about 20 states out of the 36 states of the federation, including Lagos, established their own agencies to regulate the operators operating within their domain.
The overlapping regulatory oversight confused many operators, who were made to obtain dual licences and pay multiple taxes to federal and states agencies.
However, in a bid to resolve the controversy, the Lagos State government initiated the case in 2008 to challenge the Federal Government’s powers to regulate lotteries and games of chance nationwide.
In 2022, Ekiti State joined the suit as a co-plaintiff, while the attorneys general of 34 other states were joined as defendants by the Supreme Court.
The original case dragged on for 16 years in lower and appellate courts before it was eventually laid to rest by the Supreme Court on November 25.
In its reaction to the Supreme Court ruling, the Lagos State Government praised it as a historic victory for the rule of law, federalism and the constitutional rights of states.
“This judgement reinforces the principles of true federalism, empowering states to chart their path for effective regulation”, the government said in a statement.
While pledging to ensure the gaming industry contributes to state’s economic development and benefits its residents, the Lagos State government warned lottery and gaming operators to comply with state regulations or face prosecution.
Meanwhile, the Supreme Court judgment, our correspondent learnt, has raised the hope of many states that they can circumvent the rigid legislative means to effect necessary constitutional changes in their favour.
Presently under the Nigerian Construction, amending an already enacted law requires two-thirds of members of both the Senate and House of Representatives to give assent.
That is jus the beginning of the process as the amended bill passed by the two arms of the National Assembly must also be assented to by not less than two-thirds of the 36 states Houses of Assembly.
As a result, virtually all important constitutional amendments brought before the National Assembly heavily divided along religious and ethnic lines for legislative approvals have all died prematurely in both chambers of the Assembly.
Meanwhile, with the recent Supreme Court judgment granting the control of the gaming industry to states, more state administrators, and ethnic and tribal champions are now considering taking more vexed issues bordering on true federalism to court for adjudication.
While several cases for resource control like the Value Added Tax (VAT) originally instituted by the Rivers State government and the stamp duty suits by the 36 state governments are already in court, BH gathered that state governors have instructed their attorney-generals and commissioners of justice to urgently draw up lingering constitutional issues/disputes with the Federal Government that could be quickly trashed out in court.
For instance, state governments, especially those having large populations from the southern and northern parts of the country likely to be favoured by a positive judicial pronouncement by the Supreme Court, are said to be pushing for a quick resolution of the VAT case presently before the apex court.
A Federal High Court had in 2021 ruled that states had the power to collect VAT in a suit filled by the Rivers State government.
The Federal Government, however, opposed the ruling and continued to collect VAT. The administration of former President Muhammadu Buhari also incorporated VAT collection in the Finance Act 2021 and 2022 and 2023 budgets, a decision that put the government on a collision course with the Southern Governors’ Forum (SGF).
The suit file by the Rivers government and joined by other states like Lagos, Akwa Ibom, Delta and Ogun States is currently before the Supreme Court.
A permanent secretary in the Ministry of Justice of a South West state, who did not want his identity, confirmed to our correspondent that his state is considering filing more cases in court that will enhance true federalism.
“The ruling of the Supreme Court, which ceded the powers to regulate the gaming industry has unfortunately exposed our foolish fixation on getting restructuring done through legislative means.
“Thanks to states like Lagos, Abia, Akwa Ibom, Ekiti, and Rivers, which saw into the future by kick-starting these judicial wars for true federalism, it is now obvious that we can gain a lot from the courts as it is not only the legislators that make law. Judges can also make laws through judicial pronouncements, which automatically become law when unchallenged or appealed.
“I received a memo from my superior (attorney general) on Tuesday, asking me to draw up possible cases that will better serve the state, which we can file in court.
“Apart from that, my office was also asked to identify ongoing political/resource control cases in court that we can join as co-plaintiffs.
“We are not naive. We know that we can not win all like the recent Supreme Court rulings on local governments’ autonomy and the control of inland waterways, which went against the states have shown.
“But Lagos, Rivers, and others have also won similar cases in court. They have shown the way and we want to tap into it now so that we won’t need to approach the court again for interpretation if the plaintiffs (states) win their cases and the defendants rush to court to claim we cannot benefit from the judgment since were not mentioned in the original suit”, the senior public officer stated.
Also speaking, a chieftain of the pan-Yoruba sociocultural organization, Afenifere, Chief Tunbosun Olowokere, lauded the Supreme Court ruling, calling it a good development.
“That’s what we have been telling our leaders to do since. We don’t have to put all our eggs in one basket. It is like when you are fighting a war, you must have Plan A, B and C to cover all contingencies.
“As you can see, we have won more battles in courts in the last ten years than what we achieved in the legislative chambers in 30 years.
“That is the way forward and we should encourage it. Though we are not in the same camp, I must give kudos to Asiwaju Bola Tinubu and other past governors like Obong Victor Atta and Orji Uzor Kalu, who instituted some of these cases, to which the Supreme Court is now giving judgments.
“The Nigerian constitution should be tested in court. As a lawyer, many of them won’t stand tough scrutiny.
“Let’s try and see if we can achieve from judicial pronouncements what we’ve failed to achieve through constitutional amendments”, Olowokere advised.