Online Betting Firms Gamble on Soccer-mad Nigeria
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By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) sports betting wagering is booming in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation firms that are starting to make online organizations 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 cultivated a culture of cashless payments.
Fear of electronic scams and slow internet speeds have held Nigerian online customers back but wagering firms states the new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.
"We have seen substantial development in the number of payment options that are offered. All that is definitely altering the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.
"The operators will opt for whoever is faster, whoever can link to their platform with less problems and problems," he said, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.
That growth 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 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 almost 10 million worth 61 billion.
With a young population of almost 190 million, rising mobile phone use and falling data expenses, Nigeria has long been seen as a fantastic opportunity for online services - once consumers feel comfortable with electronic payments.
Online gambling companies state that is happening, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online retailers.
British online wagering firm Betway opened its very first African service 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 business to flourish. These technological shifts encouraged Betway to begin running in Nigeria," he said.
FINTECH COMPETITION
sports betting firms capitalizing the soccer frenzy whipped up by Nigeria's involvement worldwide Cup say they are finding the payment systems developed by regional start-ups such as Paystack are proving popular online.
Paystack and another regional start-up Flutterwave, both established in 2016, are offering competitors for Nigeria's Interswitch which was established in 2002 and was the main platform utilized by companies operating in Nigeria.
"We included Paystack as one of our payment alternatives with no excitement, without revealing to our customers, and within a month it shot up to the number one most secondhand payment alternative on the website," stated Akin Alabi, founder of NairabBET.
He said NairaBET, the country's 2nd greatest sports betting company, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment option because it was included late 2017.
Paystack was set up by 2 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 mad Ikeja district of Lagos, stated the variety of month-to-month 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 every single month," said Emmanuel Quartey, Paystack's head of growth.
He said an ecosystem of developers had actually emerged around Paystack, producing software application to integrate the platform into sites. "We have actually seen a growth because community and they have brought us along," said Quartey.
Paystack stated it enables payments for a number of wagering firms but also a large range of companies, from energy services to transport companies to insurance provider Axa Mansard.
Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with investor 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 corresponded with the arrival of foreign investors wanting to tap into sports betting wagering.
Industry experts say the sector produces about $1 billion a year and is most 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 pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.
NairaBET's Alabi stated its sales were split between shops and online however the ease of electronic payments, cost of running stores and ability for clients to avoid the preconception of gaming in public indicated online deals would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a shop network, not least because many consumers still remain hesitant to invest online.
He stated the business, with about 60 percent of Nigeria's sports betting market, had a substantial network. Nigerian sports betting shops typically serve as social hubs where consumers can enjoy soccer free of charge while placing bets.
At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to see Nigeria's last heat up video game before the World Cup.
Richard Onuka, a factory worker who makes 25,000 naira a month, was fixated on a television screen inside. He said he started sports betting 3 months ago and bets up to 1,000 naira a day.
"Since I have actually been playing I have actually not won anything but I believe that a person day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)
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