Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic fraud and slow web speeds have held Nigerian online consumers back however wagering companies states the new, fast digital payment systems underpinning their sites are changing mindsets towards online deals.

“We have actually seen considerable development in the variety of payment solutions that are readily available. All that is certainly changing the video gaming space,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s business capital.

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

That development has actually been matched by a rise in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the 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 nearly 190 million, rising smart phone usage and falling information expenses, Nigeria has long been viewed as an excellent opportunity for online companies – once customers feel comfortable with electronic payments.

Online sports betting companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online merchants.

British online wagering firm Betway opened its first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 growth in the variety of fintechs, and the government as an enabler, has actually helped the company to thrive. These technological shifts motivated Betway to begin operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer frenzy worked up by Nigeria’s involvement worldwide Cup say they are finding the payment systems created by local startups such as Paystack are showing popular online.

Paystack and another regional startup Flutterwave, both established in 2016, are offering competition for Nigeria’s Interswitch which was set up in 2002 and was the primary platform utilized by companies operating in Nigeria.

“We included Paystack as one of our payment alternatives without any fanfare, without revealing to our customers, and within a month it soared to the number one most used payment alternative on the website,” stated Akin Alabi, founder of NairabBET.

He stated NairaBET, the country’s 2nd most significant wagering company, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was added in late 2017.

Paystack was set up by two Nigerian computer technology 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 investors consisting of China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the mad Ikeja district of Lagos, said the variety of regular monthly transactions 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 each and every single month,” said Emmanuel Quartey, Paystack’s head of development.

He stated an ecosystem of designers had emerged around Paystack, developing software to incorporate the platform into websites. “We have seen a development because neighborhood and they have carried us along,” stated Quartey.

Paystack said it allows payments for a number of sports betting companies but also a large variety of organizations, from energy services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as endeavor 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 accompanied the arrival of foreign investors wanting to use sports betting wagering.

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

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

NairaBET’s Alabi said its sales were split between shops and online however the ease of electronic payments, expense of running stores and capability for consumers to prevent the preconception of sports betting in public suggested 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 since many clients still remain unwilling to spend online.

He said the company, with about 60 percent of Nigeria’s sports betting wagering market, had a comprehensive network. Nigerian wagering stores often act as social hubs where customers can see soccer complimentary of charge while positioning bets.

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

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He stated he began gambling three months earlier and bets as much as 1,000 naira a day.

“Since I have actually been playing I have 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)