Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) – Online sports betting is booming in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown technology firms that are beginning to make online businesses more viable.

For several years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom’s M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and sluggish web speeds have actually held Nigerian online consumers back but wagering companies states the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.

“We have actually seen substantial development in the variety of payment solutions that are offered. All that is certainly altering the video gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s business capital.

“The operators will go with whoever is much faster, whoever can connect to their platform with less problems and glitches,” he said, including that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has actually been matched by an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and licensed banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions jumped to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing smart phone usage and falling data expenses, Nigeria has actually long been viewed as a fantastic opportunity for online services – once customers feel comfy with electronic payments.

Online gaming firms say that is happening, though reaching the 10s of millions of Nigerians without access to banking services remains an obstacle for pure online merchants.

British online wagering company Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

“There is a gradual shift to online now, that is where the market is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

“The growth in the number of fintechs, and the federal government as an enabler, has actually assisted business to flourish. These technological shifts encouraged Betway to begin running in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze whipped up by Nigeria’s involvement in the World Cup state they are finding the payment systems created by regional startups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both established in 2016, are providing competitors for Nigeria’s Interswitch which was set up in 2002 and was the primary platform utilized by services running in Nigeria.

“We included Paystack as one of our payment alternatives with no excitement, without announcing to our consumers, and within a month it soared to the primary most used payment option on the site,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation’s 2nd most significant sports betting company, now had 2 million routine customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative since it was added in late 2017.

Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase funding in Silicon Valley’s Y-Combinator program.

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, stated the number of regular monthly deals it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.

“In early 2016 we were processing about $3,000 a month. Today we process well over $11 million every month,” stated Emmanuel Quartey, Paystack’s head of development.

He said an ecosystem of designers had actually emerged around Paystack, creating software to incorporate the platform into sites. “We have actually seen a growth in that neighborhood and they have actually brought us along,” said Quartey.

Paystack stated it enables payments for a number of wagering firms but likewise a broad range of organizations, from utility services to transport companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program in addition to venture capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria’s payment culture have actually coincided with the arrival of foreign investors wishing to take advantage of sports betting.

Industry specialists say the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company is more established.

Russia’s 1XBet and Slovakia’s DOXXbet have 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 company released in 2015.

NairaBET’s Alabi stated its sales were divided in between shops and online but the ease of electronic payments, expense of running shops and ability for customers to prevent the stigma of gaming in public indicated online deals would grow.

But despite advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was essential to have a shop network, not least due to the fact that numerous clients still remain unwilling to spend online.

He said the company, with about 60 percent of Nigeria’s sports betting wagering market, had an extensive network. Nigerian wagering stores frequently act as social hubs where consumers can enjoy soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to view Nigeria’s up video game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He said he began sports betting 3 months ago and bets up to 1,000 naira a day.

“Since I have actually been playing I have actually not won anything however I believe that one day I will win,” stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)