Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) – Online sports betting wagering is expanding in soccer-mad Nigeria largely thanks to payment systems developed by homegrown technology firms that are beginning to make online businesses 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 money transfers have fostered a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back but wagering firms states the brand-new, quick digital payment systems underpinning their websites are altering mindsets towards online deals.

“We have seen significant development in the number of payment solutions that are readily available. All that is definitely altering the video gaming space,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s commercial capital.

“The operators will opt for whoever is faster, whoever can link to their platform with less problems and problems,” he said, adding that taxes from sports betting wagering 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 data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the central 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 first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of almost 190 million, rising smart phone usage and falling information expenses, Nigeria has actually long been seen as a fantastic opportunity for online companies – once consumers feel comfortable with electronic payments.

Online sports betting firms say that is occurring, though reaching the tens of without access to banking services remains a difficulty for pure online merchants.

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 gradual shift to online now, that is where the industry is going,” Betway’s Nigeria manager Lere Awokoya said.

“The growth in the variety of fintechs, and the government as an enabler, has actually assisted the organization to thrive. These technological shifts motivated Betway to start running in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria’s participation in the World Cup state they are finding the payment systems developed by local start-ups such as Paystack are showing popular online.

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

“We included Paystack as one of our payment options with no excitement, without announcing to our consumers, and within a month it soared to the top most secondhand payment choice on the site,” said Akin Alabi, founder of NairabBET.

He said NairaBET, the country’s second biggest wagering firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option since it was included in late 2017.

Paystack was set up by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got early phase financing in Silicon Valley’s Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers including China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the variety of monthly deals it processed increased 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 growth.

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

Paystack said it makes it possible for payments for a variety of sports betting firms however also a broad range of businesses, from utility services to carry companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program as well as 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 corresponded with the arrival of foreign investors hoping to take advantage of sports betting wagering.

Industry experts state the sector creates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more developed.

Russia’s 1XBet and Slovakia’s DOXXbet have actually both set up in Nigeria in the last 2 years while Italy’s Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm released in 2015.

NairaBET’s Alabi stated its sales were split in between stores and online however the ease of electronic payments, expense of running stores and ability for consumers to prevent the preconception of gaming in public implied online transactions would grow.

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

He stated the business, with about 60 percent of Nigeria’s sports betting wagering market, had an extensive network. Nigerian wagering shops frequently act as social centers where clients can see soccer totally 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 employee who makes 25,000 naira a month, was fixated on a television screen inside. He stated he started gambling three months earlier and bets as much as 1,000 naira a day.

“Since I have been playing I have actually not won anything but I believe 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)