Betting companies will not be allowed to pay out more than one million Birr to winners if a new directive drafted by the National Lottery Administration comes through the approval process.

There have been no restrictions on payouts, where betting companies claim to have made as much as 10 million Br on a single ticket. It is a thriving industry where close to 42 companies are allowed only betting on sports matches, but with little regulatory oversight.

The Lottery Administration began works on the directive in the wake of strong criticism from civil society organisations and the general public about the impact of the betting industry, particularly the youth.

The betting market will fall under more stringent regulation once the Ministry of Revenues approved the directive. The draft directive is also under review by the Office of the Federal Attorney General.

The rationale for the regulatory oversight is to ensure betting companies have adequate capital to run their business, preventing potential defaults on bets. The move will enable the six-decade Lottery Administration, which registered close to one billion Birr in revenues last year, to resume providing permits to new entrants almost two years after it suspended the service.

The directive will require betting companies to secure a minimum of 1.5 million Br in bank guarantees to continue operations. The existing directive, issued eight years ago, does not require the betting companies to present bank guarantees.

A permit fee will increase significantly from the 400 Br charged now, although officials of the Administration declined to disclose how much. The directive will compel betting companies to carry out charitable works, committing 0.5pc of their sales, while the minimum age requirement to take part in gambling will also be raised to 21. This is contrary to the trend in other African countries that permit betting, including Kenya, where the legal age is 18.

“Companies with inadequate preparation and capital used to get permits easily,” said Desse Dejene, director of licensing and regulation of the Administration.