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 innovation firms that are starting to make online companies more feasible.

For 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 actually cultivated a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have held Nigerian online customers back but wagering firms says the new, fast digital payment systems underpinning their websites are altering attitudes towards online transactions.

„We have seen substantial development in the number of payment solutions that are offered. All that is certainly changing the video gaming area,“ stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s commercial capital.

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

That development has actually been matched by an increase 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 a total 132 billion naira ($420 million). Transactions leapt 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, increasing mobile phone usage and falling data expenses, Nigeria has long been seen as a great chance for online businesses – once customers feel comfortable with electronic payments.

Online gambling firms state that is happening, though reaching the 10s of millions of Nigerians without access to banking services stays an obstacle for pure online retailers.

British online sports betting company Betway opened its first African service 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 market is going,“ Betway’s Nigeria manager Lere Awokoya said.

„The growth in the variety of fintechs, and the federal government as an enabler, has helped the business to flourish. These technological shifts encouraged Betway to start running in Nigeria,“ he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy whipped up by Nigeria’s involvement in the World Cup state they are discovering the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria’s Interswitch which was established in 2002 and was the primary platform used by businesses running in Nigeria.

„We added Paystack as one of our payment options without any fanfare, without announcing to our customers, and within a month it soared to the top most secondhand payment alternative on the site,“ stated Akin Alabi, creator of NairabBET.

He said NairaBET, the nation’s second most significant wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option since it was added in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage 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 frenetic Ikeja district of Lagos, said the variety of monthly 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 each and every single month,“ said Emmanuel Quartey, Paystack’s head of growth.

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

Paystack stated it allows payments for a number of wagering firms however likewise a wide variety of businesses, from energy services to carry business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with 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 investors wanting to use 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 developed.

Russia’s 1XBet and Slovakia’s DOXXbet have both established in Nigeria in the last two years while was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian firm introduced in 2015.

NairaBET’s Alabi said its sales were divided between shops and online however the ease of electronic payments, expense of running shops and ability for consumers to avoid the preconception of gaming in public meant online transactions would grow.

But despite advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was crucial to have a store network, not least since many customers still remain hesitant to spend online.

He stated the company, with about 60 percent of Nigeria’s sports betting wagering market, had a comprehensive network. Nigerian wagering shops typically function as social centers where consumers can see soccer totally free of charge while putting bets.

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

Richard Onuka, a factory employee who earns 25,000 naira a month, was fixated on a TV screen inside. He said he began gambling 3 months back and bets as much as 1,000 naira a day.

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