By Babayemi Olaniyan Esq, LL.M & Geraldine Nzulumike Esq, LL.M
Introduction
The Supreme Court’s decision in Attorney General of Lagos State & Ors v Attorney General of the Federation & Ors (Suit No. SC/1/2008), delivered on 22nd November 2024, represents a landmark moment in Nigeria’s constitutional jurisprudence. By declaring the National Lottery Act 2005 (NLA) unconstitutional, the Supreme Court reaffirmed a foundational principle of federalism, namely that legislative powers not expressly conferred on the federal government remain within the authority of the states.
The ruling resolved a long-standing conflict between National and state regulatory frameworks, clarifying that lotteries and gaming fall under the residual powers of state governments. While the decision settles the question of jurisdiction, it also raises deeper considerations about how lottery and gaming activities are conceptualised within the modern economy.
The court’s finding that lotteries do not constitute trade and commerce under the Constitution warrants further reflection in light of the structured, revenue-driven, and digitally enabled nature of contemporary gaming operations. This article examines these issues, arguing that the commercial character of lotteries and gaming is unmistakable despite constitutional classifications.
Understanding Trade and Commerce
Commerce[1] refers to the organised exchange of goods or services for money between two or more parties, often on a recurring or large-scale basis. It emphasises the sale of finished products rather than their production, marketing, or distribution. Trade,[2] on the other hand, generally describes the final transaction in which a seller provides a product or service and the buyer pays for it. In this sense, trade is a subset of commerce, which itself is a component of business activity.
As economies expanded and diversified, the law adjusted its understanding. Commerce came to include transportation, communications, banking, insurance, and a wide range of service activities that generate value through organisation and scale rather than physical exchange. In this sense, modern commerce is defined less by form and more by structure, continuity, and economic purpose.[3]
The Structure of Modern Lottery Operations
Today’s lotteries operate as structured economic enterprises with clear revenue streams, market participation and commercial ecosystems.[4] Operators develop products based on pricing models, probability analysis, and market research. Tickets or participation opportunities are distributed through licensed retail outlets, digital platforms, and online systems. Advertising and branding drive market engagement, while integrated payment systems ensure accountability.
Participants pay for access to a regulated service with predetermined rules, and the revenue collected is allocated to prizes, operating costs, taxes, and retained earnings.[5] Compliance obligations include auditing, reporting, and adherence to consumer protection standards. The entire process mirrors other licensed service industries, and the wider commercial ecosystem includes technology providers, payment processors, insurers, auditors, marketers, and employees.
A common argument for excluding lotteries from commerce is the element of chance. However, many recognised commercial operations rely on probabilistic outcomes, e.g., insurance pricing, predicting stock prices, risk management, strategic planning, investment management, and financial management, all of which involve risk, yet they are universally classified as commercial. The uncertainty of winning does not diminish the structured economic activity inherent in lotteries.
Comparative jurisprudence supports recognising gambling as a trade when pursued systematically and profitably.[6] In the United States, courts have consistently held that full-time gambling operations constitute a trade or business, emphasising regularity, continuity, and income generation over the tangibility of exchanged items.[7]
Regulation and State Authority
In federal systems, lotteries are often heavily regulated precisely because of their economic significance, hence, regulation does not erase commercial character. In the United States, federal law[8] restricts certain lottery-related activities across state lines while exempting lotteries conducted by states under state authority. The law focuses on who may conduct lotteries and under what conditions, but it does not deny their economic nature.[9]
The Supreme Court’s ruling in Attorney General of Lagos State & Ors v Attorney General of the Federation & Ors affirms that states hold the power to legislate on lottery and gaming under the residual legislative powers of government provided in Section 4(7)(a) of the 1999 Constitution (as amended).[10] This decentralisation empowers states to create regulatory frameworks tailored to local needs, but it also introduces practical challenges.
Operators must now navigate multiple state regimes,[11] each with distinct licensing fees, compliance obligations, and enforcement standards. Digital and remote operations add further complexity.[12] A company based in Lagos State but offering online services nationwide must determine whether to obtain licenses from each state (rather than national licenses issued by the National Lottery Regulatory Commission[13]), raising questions about the scope of regulatory reach and enforcement.
States that adopt strategic, collaborative approaches to regulation can mitigate fragmentation. For example, proposals for a Universal Reciprocity Licensing Regime under the Federation of State Gaming Regulators of Nigeria seek to harmonise licensing across states while maintaining state-level oversight.[14]
Reassessing Constitutional and Commercial Classifications
The court’s conclusion that lotteries do not constitute trade and commerce is best understood as a question of constitutional allocation rather than economic description. The absence of lotteries from the Exclusive and Concurrent Legislative Lists answers the question of who may legislate, but does not necessarily describe what lotteries are in economic terms.
Federalism determines who may regulate lotteries, but commercial reality defines what they are. Modern lotteries are commercial enterprises that drive structured revenue, employ technology, engage markets, and contribute to economic activity. Jurisdiction and economic classification serve distinct purposes, and conflating the two obscures policy considerations and complicates regulatory design. Recognising the commercial nature of lotteries supports effective regulation, consumer protection, and sustainable revenue generation, while maintaining constitutional clarity.
Governments license lotteries, tax their revenues, and rely on them as structured sources of public funding.[15] Investors and service providers approach the sector as a commercial industry. Consumers participate with financial expectations shaped by advertising and regulation. Describing lottery and gaming services as non-commercial while embedding them in economic planning creates tensions within legal and policy frameworks.
As technology continues to transform gaming through digital platforms and cross-border connectivity, these tensions are likely to grow. A clear understanding of the economic nature of lotteries will be essential for effective regulation, consumer protection, and sustainable public revenue generation.
It is also apposite to mention that not everything absent in the Exclusive or Concurrent list immediately falls under Residual list. It will be practically impossible to submerge all items under those two lists and that is why legislators introduced umbrella terms to cover the field. This will be a more futuristic approach
Conclusion
The Supreme Court’s decision in Attorney General of Lagos State & Ors v Attorney General of the Federation & Ors (Suit No. SC/1/2008) affirms state autonomy within Nigeria’s federal structure. However, the judgment highlights the need for thoughtful state-level regulatory frameworks that balance economic development, consumer protection, and industry innovation. Lottery and gaming services operate through organised markets, continuous economic exchange, and revenue-driven enterprise. The question must be asked with the introduction of the Internet and online gaming, who regulates such in the absence of the federal agency responsible. There is an urgent need to revisit our position as regards to Lottery and Gaming services. The term Trade and Commerce is quite expansive and even other climes have defined commerce to include lottery. Our Democracy is growing, our laws must grow.
[1] James Chen, ‘Commerce vs. Business and Trade: Understanding the Differences,’ Investopedia 29 August 2025 <https://www.investopedia.com/terms/c/commerce.asp> accessed 22 December 2025
[2] Ibid
[3] ‘Introduction to Commerce,’ FCT Education Management Information System <https://fctemis.org/notes/7160_INTRODUCTION%20TO%20COMMERCE.pdf> accessed 22 December 2025
[4] James F. Cosgrave, ‘Celebrating the Contingent: The Modern Lottery As Collective Representation in Late Capitalism,’ Canadian Journal of Sociology 46(2) 2021 page 125 – 129
[5] ‘How Lotteries Work: Understanding the Rules and Prize Structure,’ Crustlab 21 October 2025 <https://crustlab.com/blog/how-lotteries-work/> accessed 22 December 2025
[6] Legal Nature and Essential Features of Lotteries. (2024). Law and World, 10(32), 75-84 <https://doi.org/10.36475/10.4.6> accessed 22 December 2025
[7] Federal Income Taxation – Trade or Business – A Full-Time Gambler Who Gambles Solely For His Own Benefit is Engaged In a Trade or Business – Commissioner v Groetzinger, 107 S. Ct. 980 (1987)
[8] 18 U.S. Code Chapter 61
[9] Lottery Case, 188 U.S. 321 (1903)
[10] Cyriacus C Orlu, Francis Jarlgo, Oliver Chukkol, ‘Supreme Court Declares National Lottery Act Invalid: Implications on Lottery Businesses in Nigeria,’ Templars Law 25 November 2024 <https://www.templars-law.com/app/uploads/2024/11/Client-Alert-Supreme-Court-Declares-National-Lottery-Act-Invalid.pdf> accessed 22 December 2025
[11] ‘Lotteries and Gaming Law and Regulatory Tracker: Nigeria 2025,’ Aluko & Oyebode <https://www.aluko-oyebode.com/wp-content/uploads/2025/03/State-Regulation-in-the-Gaming-Sector-Aluko-Oyebode-2.pdf> accessed 22 December 2025
[12] Tiwalola Osazuwa, Peretimi Akinmodun, and Mubaraq Popoola, ‘Regulation of Lotteries in Nigeria: Review of the Supreme Court’s Decision and its Implications’ Chambers and Partners 26 February 2025 <https://chambers.com/articles/regulation-of-lotteries-in-nigeria-review-of-the-supreme-court-s-decision-and-its-implications> accessed 22 December 2025
[13] Eberechi May Okoh, Idode Momoh Olajide, and Akinola Samuel Oladimeji, ‘Regulation and Taxation Of Lottery and Gaming Business In Nigeria,’ Streamsowers & Köhn January 2023 <https://sskohn.com/wp-content/uploads/2023/01/REGULATION-AND-TAXATION-OF-LOTTERY-AND-GAMING-BUSINESS-IN-NIGERIA.pdf> accessed 22 December 2025
[14] ‘Supreme Court verdict on the National Lottery Act: Implications for the lottery and gaming industry,’ PWC
<https://www.pwc.com/ng/en/assets/pdf/supreme-court-verdict-on-the-national-lottery-act.pdf> accessed 22 December 2025
[15] Ibid n13