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Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) – Online sports betting is growing in soccer-mad Nigeria mainly thanks to payment systems established by homegrown technology companies that are beginning to make online companies more practical.

For many years, mobile payments stopped working to take off in Nigeria as they have in nations such as Kenya, where Safaricom’s M-Pesa money transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online consumers back however wagering firms states the new, quick digital payment systems underpinning their websites are changing mindsets towards online transactions.

“We have seen significant growth in the variety of payment services that are readily available. All that is absolutely changing the video gaming space,” said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s commercial capital.

“The operators will opt for whoever is quicker, whoever can link to their platform with less concerns and problems,” he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by a rise in web payments, according to information 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 almost 190 million, increasing mobile phone usage and falling information costs, Nigeria has long been viewed as a great chance for online businesses – once consumers feel comfortable with electronic payments.

Online gambling companies say that is happening, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty for pure online retailers.

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

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

“The development in the variety of fintechs, and the government as an enabler, has helped the organization to thrive. These technological shifts motivated Betway to start operating in Nigeria,” he stated.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze worked up by Nigeria’s participation on the planet Cup state they are discovering the payment systems developed by local start-ups such as Paystack are proving popular online.

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

“We included Paystack as one of our payment alternatives without any excitement, without announcing to our consumers, and within a month it shot up to the primary most used payment option on the website,” stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the nation’s 2nd greatest sports betting company, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative given that it was included late 2017.

Paystack was established 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 investors including China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, said the number of month-to-month transactions it processed rose 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 every month,” stated Emmanuel Quartey, Paystack’s head of development.

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

Paystack said it allows payments for a variety of wagering companies however likewise a large range of services, from utility services to transfer companies to insurance company 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 in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria’s payment culture have actually corresponded with the arrival of foreign financiers hoping to take advantage of sports betting wagering.

Industry professionals 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 2 years while Italy’s Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET’s Alabi said its sales were divided in between stores and online however the ease of electronic payments, expense of and ability for clients to avoid the stigma of sports betting in public implied online deals would grow.

But regardless of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – stated it was essential to have a shop network, not least due to the fact that numerous clients still stay reluctant to invest online.

He stated the business, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian wagering stores frequently serve as social centers where consumers can watch soccer free of charge while putting bets.

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

Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He said he started gambling 3 months back and bets approximately 1,000 naira a day.

“Since I have been playing I have not won anything but I think 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)