Online Betting Firms Gamble on Soccer-mad Nigeria
By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) – Online sports betting is expanding in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology companies that are beginning to make online services more feasible.
For many years, mobile payments failed to take off in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have fostered a culture of cashless payments.
Fear of electronic scams and slow web speeds have held Nigerian online consumers back however sports betting companies states the brand-new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.
“We have seen substantial development in the variety of payment services that are available. All that is absolutely altering the gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s business capital.
“The operators will choose whoever is faster, whoever can connect to their platform with less problems and problems,” he said, including that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.
That growth has actually been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and licensed banks.
In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were nearly 10 million worth 61 billion.
With a young population of nearly 190 million, increasing smart phone use and falling information costs, Nigeria has long been viewed as an excellent opportunity for online businesses – once consumers feel comfortable with electronic payments.
Online sports betting companies state that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online sellers.
British online sports betting company Betway opened its very first African in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.
“There is a progressive shift to online now, that is where the market is going,” Betway’s Nigeria manager Lere Awokoya said.
“The growth in the number of fintechs, and the federal government as an enabler, has assisted business to flourish. These technological shifts encouraged Betway to begin operating in Nigeria,” he said.
FINTECH COMPETITION
sports betting firms capitalizing the soccer craze whipped up by Nigeria’s participation on the planet Cup state they are discovering the payment systems produced by local start-ups such as Paystack are showing popular online.
Paystack and another local startup Flutterwave, both founded in 2016, are providing competitors for Nigeria’s Interswitch which was established in 2002 and was the main platform utilized by companies operating in Nigeria.
“We added Paystack as one of our payment choices with no excitement, without announcing to our clients, and within a month it shot up to the top most used payment alternative on the website,” said Akin Alabi, creator of NairabBET.
He said NairaBET, the country’s 2nd biggest sports betting firm, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative considering that it was included late 2017.
Paystack was set up by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who got early stage financing in Silicon Valley’s Y-Combinator programme.
In December 2016, it raised $1.3 million from financiers consisting of China’s Tencent and Comcast Ventures in the United States.
Paystack, based in the mad Ikeja district of Lagos, said the variety of regular monthly transactions it processed increased from about 8,000 in early 2016 to more than 900,000 as of June 2018.
“In early 2016 we were processing about $3,000 a month. Today we process well over $11 million each and every single month,” said Emmanuel Quartey, Paystack’s head of development.
He said an ecosystem of developers had actually emerged around Paystack, creating software to incorporate the platform into sites. “We have actually seen a development in that community and they have brought us along,” stated Quartey.
Paystack said it enables payments for a number of wagering companies but also a vast array of companies, from energy services to carry companies to insurer Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program in addition to investor Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.
FOREIGN INVESTMENT
Shifts in Nigeria’s payment culture have actually corresponded with the arrival of foreign investors hoping to tap into sports betting.
Industry professionals state the sector generates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where business is more established.
Russia’s 1XBet and Slovakia’s DOXXbet have actually both set up in Nigeria in the last two years while Italy’s Goldbet led the trend, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.
NairaBET’s Alabi stated its sales were split in between stores and online however the ease of electronic payments, cost of running shops and capability for customers to avoid the stigma of gambling in public implied online deals would grow.
But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was important to have a store network, not least because many customers still stay hesitant to invest online.
He stated the company, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian wagering shops typically function as social hubs where clients can enjoy soccer complimentary of charge while putting bets.
At a BetKing hall deep inside the dynamic Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria’s final heat up video game before the World Cup.
Richard Onuka, a factory employee who makes 25,000 naira a month, was fixated on a TV screen inside. He said he began gambling three months earlier and bets approximately 1,000 naira a day.
“Since I have been playing I have actually not won anything but I think that one day I will win,” said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)
