Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

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

For years, mobile payments failed to remove in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa money transfers have actually promoted a culture of cashless payments.

Fear of electronic fraud and slow web speeds have actually held Nigerian online consumers back but sports betting firms says the new, quick digital payment systems underpinning their sites are altering attitudes towards online transactions.

“We have actually seen substantial development in the number of payment options that are offered. All that is absolutely changing the 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 concerns and glitches,” he said, 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 data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and licensed 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 nearly 190 million, rising smart phone usage and falling data expenses, Nigeria has actually long been seen as a great chance for online companies – once consumers feel comfy with electronic payments.

Online sports betting companies state that is occurring, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online merchants.

British online wagering firm Betway opened its very first African company in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 assisted the service to grow. These technological shifts motivated Betway to start running in Nigeria,” he said.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria’s involvement worldwide Cup say they are finding the payment systems created by local start-ups such as Paystack are showing popular online.

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

“We added Paystack as one of our payment options without any excitement, without announcing to our consumers, and within a month it soared to the primary most secondhand payment alternative on the site,” said Akin Alabi, creator of NairabBET.

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

Paystack was set up by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early phase funding in Silicon Valley’s Y-Combinator programme.

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

Paystack, based in the frenetic Ikeja district of Lagos, stated the number of regular 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 single month,” said Emmanuel Quartey, Paystack’s head of growth.

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

Paystack said it makes it possible for payments for a number of sports betting firms but likewise a wide variety of organizations, from utility services to transfer business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme in addition to venture 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 accompanied the arrival of foreign financiers wishing to tap into sports betting.

Industry specialists say the sector generates 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 both set up 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 firm introduced in 2015.

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

But regardless of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – stated it was very important to have a shop network, not least since many customers still remain hesitant to spend online.

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

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria’s final heat up video 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 three months earlier 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 one day I will win,” said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)