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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 booming in soccer-mad Nigeria mainly thanks to payment systems established by homegrown technology companies that are beginning to make online companies more feasible.

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

Fear of electronic scams and slow web speeds have online customers back but sports betting firms states the brand-new, fast digital payment systems underpinning their websites are changing attitudes towards online deals.

“We have actually seen considerable growth in the variety of payment options that are available. All that is definitely changing the video gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria’s commercial capital.

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

That development has been matched by an increase in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and certified 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone usage and falling data costs, Nigeria has actually long been seen as an excellent opportunity for online organizations – once customers feel comfortable with electronic payments.

Online gambling firms say that is occurring, though reaching the tens of millions of Nigerians without access to banking services stays an obstacle for pure online retailers.

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

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

“The development in the variety of fintechs, and the federal government as an enabler, has assisted business to grow. These technological shifts motivated Betway to begin operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze whipped up by Nigeria’s participation on the planet Cup state they are discovering the payment systems developed by regional start-ups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are providing competitors for Nigeria’s Interswitch which was set up in 2002 and was the main platform used by organizations operating in Nigeria.

“We added Paystack as one of our payment choices without any fanfare, without revealing to our clients, and within a month it shot up to the number one most used payment option on the site,” stated Akin Alabi, founder of NairabBET.

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

Paystack was set up by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing 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, said the number of month-to-month deals 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 single month,” stated Emmanuel Quartey, Paystack’s head of development.

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

Paystack said it makes it possible for payments for a number of sports betting companies but also a vast array of businesses, from utility services to transfer business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with endeavor capitalists 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 accompanied the arrival of foreign investors wishing to take advantage of sports betting wagering.

Industry experts say the sector produces 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 established in Nigeria in the last 2 years while Italy’s Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm launched in 2015.

NairaBET’s Alabi stated its sales were split between stores and online but the ease of electronic payments, cost of running stores and capability for clients to prevent the preconception of gambling in public indicated online transactions would grow.

But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was necessary to have a shop network, not least since lots of consumers still remain reluctant to invest online.

He said the business, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian wagering shops typically function as social hubs where customers can watch soccer free of charge while placing bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans collected 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 began gambling three months ago and bets up to 1,000 naira a day.

“Since I have been playing I have not won anything however 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)