Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

LAGOS, June 25 (Reuters) – Online sports betting is growing in soccer-mad Nigeria largely thanks to payment systems established by homegrown innovation companies that are starting to make online services more practical.

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

Fear of electronic scams and slow internet speeds have held Nigerian online customers back however wagering companies states the new, quick digital payment systems underpinning their websites are altering attitudes towards online deals.

“We have actually seen considerable growth in the variety of payment services that are available. All that is absolutely altering the video gaming area,” said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s industrial capital.

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

That growth has been matched by a rise in web payments, according to data 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 leapt to 29 million worth 185 billion in 2017 and in the first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of almost 190 million, increasing mobile phone usage and falling information expenses, Nigeria has actually long been seen as an excellent opportunity for online businesses – once consumers feel comfy with electronic payments.

Online say that is occurring, though reaching the tens of millions of Nigerians without access to banking services remains a challenge for pure online merchants.

British online wagering company Betway opened its first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced in Nigeria in January.

“There is a steady 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 actually assisted the service to prosper. These technological shifts encouraged Betway to begin running in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies cashing in on the soccer frenzy worked up by Nigeria’s participation in the World Cup state they are discovering the payment systems developed by regional startups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both established in 2016, are offering competitors for Nigeria’s Interswitch which was set up in 2002 and was the main platform utilized by companies operating in Nigeria.

“We added Paystack as one of our payment alternatives with no fanfare, without announcing to our clients, and within a month it soared to the top most used payment choice on the website,” said Akin Alabi, founder of NairabBET.

He said NairaBET, the nation’s second most significant sports betting firm, now had 2 million routine clients on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice since it was included late 2017.

Paystack was established by two Nigerian computer system 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, said the number of monthly deals it processed increased 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 single month,” stated Emmanuel Quartey, Paystack’s head of growth.

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

Paystack said it enables payments for a number of wagering firms however likewise a vast array of companies, from energy services to carry business to insurer Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme along with 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 accompanied the arrival of foreign investors intending to tap into sports betting.

Industry specialists state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company is more developed.

Russia’s 1XBet and Slovakia’s DOXXbet have both established in Nigeria in the last two years while Italy’s Goldbet led the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian company introduced in 2015.

NairaBET’s Alabi said its sales were split between shops and online but the ease of electronic payments, expense of running shops and capability for consumers to prevent the stigma of gaming in public meant online transactions would grow.

But despite advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was very important to have a shop network, not least since lots of clients still remain unwilling to invest online.

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

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens of soccer fans collected to view Nigeria’s final heat up game before the World Cup.

Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a TV screen inside. He said he began gambling three months ago and bets up to 1,000 naira a day.

“Since I have actually been playing I have actually 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)