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 innovation companies that are beginning to make online businesses more feasible.

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

Fear of electronic fraud and slow internet speeds have held Nigerian online customers back but sports betting firms states the new, quick digital payment systems underpinning their websites are changing mindsets towards online transactions.

“We have actually seen considerable growth in the variety of payment services that are readily available. All that is absolutely altering the gaming area,” said 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 connect 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 growth has been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the main bank and certified banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions leapt 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 almost 190 million, increasing mobile phone usage and falling data costs, Nigeria has actually long been seen as a fantastic chance for online businesses – once customers feel comfy with electronic payments.

Online sports betting companies say that is occurring, though reaching the 10s of countless Nigerians without access to banking services stays a difficulty for pure online sellers.

British online sports betting company Betway opened its first African service 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 industry is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

“The growth in the variety of fintechs, and the government as an enabler, has helped business to prosper. These technological shifts encouraged Betway to start operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze worked up by Nigeria’s involvement in the World Cup say they are finding the payment systems created by regional start-ups such as Paystack are proving popular online.

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

“We included Paystack as one of our payment choices without any fanfare, without revealing to our customers, and within a month it shot up to the number one most used payment choice on the site,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the country’s second greatest sports betting firm, now had 2 million regular clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment alternative given that it was included in late 2017.

Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage funding 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, stated the number of regular 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 each and every single month,” stated Emmanuel Quartey, Paystack’s head of development.

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

Paystack stated it enables payments for a variety of sports betting companies however also a large range of services, from utility services to carry companies to insurer Axa Mansard.

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

Industry professionals 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 established.

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

NairaBET’s Alabi said its sales were divided between shops and online however the ease of electronic payments, cost of running stores and ability for customers to prevent the stigma of gaming in public indicated online deals would grow.

But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was necessary to have a shop network, not least since numerous clients still stay unwilling to invest online.

He said the business, with about 60 percent of Nigeria’s sports betting market, had a comprehensive network. Nigerian wagering shops frequently function as social centers where customers can view soccer totally free of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, lots of soccer fans collected to see Nigeria’s final heat up video 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 sports betting three months back and bets as much as 1,000 naira a day.

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