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 mostly thanks to payment systems developed by homegrown innovation companies that are starting to make online organizations 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 cultivated a culture of cashless payments.

Fear of electronic fraud and slow internet speeds have actually held Nigerian online consumers back however sports betting companies states the brand-new, quick digital payment systems underpinning their sites are changing mindsets towards online deals.

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

“The operators will go with whoever is much faster, whoever can link to their platform with less concerns and problems,” he stated, including that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has actually 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 a total 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 use and falling information costs, has long been viewed as a great opportunity for online businesses – once consumers feel comfortable with electronic payments.

Online gaming companies say that is taking place, though reaching the tens of millions of Nigerians without access to banking services stays a difficulty for pure online merchants.

British online sports betting company Betway opened its first African organization 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 supervisor Lere Awokoya said.

“The growth in the number of fintechs, and the government as an enabler, has helped business to grow. These technological shifts encouraged Betway to begin running in Nigeria,” he said.

FINTECH COMPETITION

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

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

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

He stated NairaBET, the nation’s 2nd biggest wagering firm, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment option given that it was included 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 programme.

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 variety of monthly transactions 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 month,” said Emmanuel Quartey, Paystack’s head of development.

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

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

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme along with 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 actually accompanied the arrival of foreign financiers hoping to use sports betting wagering.

Industry experts say 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 both set up in Nigeria in the last 2 years while Italy’s Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

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

But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was very important to have a store network, not least because numerous consumers still remain unwilling to invest online.

He said the company, with about 60 percent of Nigeria’s sports betting market, had a comprehensive network. Nigerian sports betting shops typically serve as social centers where customers can watch 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 see Nigeria’s final 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 started gambling three months back and bets approximately 1,000 naira a day.

“Since I have actually been playing I have 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)