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 established by homegrown innovation companies that are starting to make online companies more viable.

For many years, mobile payments stopped working to take off in Nigeria as they have in countries such as Kenya, where Safaricom’s M-Pesa cash transfers have fostered a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have actually held Nigerian online customers back however sports betting firms says the new, quick digital payment systems underpinning their sites are altering attitudes towards online transactions.

“We have actually seen significant growth in the number of payment services that are available. All that is absolutely altering the gaming space,” 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 connect to their platform with less issues 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 central 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 first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young of almost 190 million, increasing smart phone use and falling data costs, Nigeria has long been seen as an excellent chance for online companies – once consumers feel comfortable with electronic payments.

Online gaming firms 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 sports betting firm Betway opened its very first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced in Nigeria in January.

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

“The development in the number of fintechs, and the federal government as an enabler, has assisted the service to grow. These technological shifts motivated Betway to begin running in Nigeria,” he stated.

FINTECH COMPETITION

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

Paystack and another local startup Flutterwave, both established in 2016, are offering competitors for Nigeria’s Interswitch which was established in 2002 and was the main platform utilized by services running in Nigeria.

“We added Paystack as one of our payment options with no excitement, without announcing to our consumers, and within a month it shot up to the top most used payment alternative on the website,” stated Akin Alabi, creator of NairabBET.

He stated NairaBET, the country’s 2nd greatest wagering firm, now had 2 million regular consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that 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 funding in Silicon Valley’s Y-Combinator programme.

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

Paystack, based in the frenetic Ikeja district of Lagos, stated the variety of regular monthly transactions it processed rose 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,” stated Emmanuel Quartey, Paystack’s head of growth.

He said an ecosystem of developers had actually emerged around Paystack, developing software application to integrate the platform into websites. “We have seen a development in that neighborhood and they have carried us along,” stated Quartey.

Paystack said it enables payments for a number of sports betting firms however likewise a wide variety of services, from utility services to transfer companies to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme as well as 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 hoping to take advantage of sports betting.

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

Russia’s 1XBet and Slovakia’s DOXXbet have actually both established in Nigeria in the last 2 years while Italy’s Goldbet led the pattern, taking a half stake in market leader Bet9ja when the Nigerian firm released in 2015.

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

But despite 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 unwilling to invest online.

He said the business, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian sports betting stores typically function as social centers where customers can enjoy soccer complimentary of charge while putting bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to enjoy Nigeria’s last warm 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 started sports betting three months earlier and bets approximately 1,000 naira a day.

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