Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish web speeds have actually held Nigerian online consumers back but sports betting firms states the new, quick digital payment systems underpinning their sites are changing attitudes towards online deals.

“We have actually seen significant development in the variety of payment options that are available. All that is absolutely changing the gaming area,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s business capital.

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

That growth has actually been matched by a rise 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 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 nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing smart phone usage and falling data expenses, Nigeria has long been seen as a terrific opportunity for online organizations – once consumers feel comfortable with electronic payments.

Online gambling companies state that is happening, though reaching the 10s of countless Nigerians without access to banking services remains an obstacle for pure online merchants.

British online wagering firm Betway opened its first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

“There is a gradual 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 government as an enabler, has assisted business to flourish. These technological shifts encouraged Betway to begin operating in Nigeria,” he stated.

FINTECH COMPETITION

sports betting companies cashing in on the soccer craze whipped up by Nigeria’s involvement on the planet Cup state they are finding the payment systems produced by regional startups such as Paystack are proving popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are supplying competitors for Nigeria’s Interswitch which was established in 2002 and was the primary platform utilized by services 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 soared to the top most pre-owned payment alternative on the website,” stated Akin Alabi, founder of NairabBET.

He said NairaBET, the nation’s second biggest sports betting firm, now had 2 million routine clients on its site, up from 500,000 in 2013, and Paystack remained the most popular payment alternative since 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 investors consisting of China’s Tencent and Comcast Ventures in the United States.

Paystack, based in the mad 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 every single month,” stated Emmanuel Quartey, Paystack’s head of growth.

He stated an environment of designers had emerged around Paystack, developing software to integrate the platform into sites. “We have seen a development in that community and they have actually brought us along,” said Quartey.

Paystack stated it enables payments for a variety of wagering firms but also a wide variety of services, from energy services to transport business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator program as well as investor 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 financiers intending to take advantage of sports betting wagering.

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 company is more established.

Russia’s 1XBet and Slovakia’s DOXXbet have both established 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 divided in between shops and online but the ease of electronic payments, expense of running stores and capability for clients to prevent the preconception of gaming in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – stated it was very important to have a store network, not least due to the fact that many clients still stay reluctant to invest online.

He stated the business, with about 60 percent of Nigeria’s sports betting wagering market, had a substantial network. Nigerian sports betting shops frequently act as social hubs where customers can enjoy soccer complimentary of charge while placing bets.

At a BetKing hall deep inside the dynamic in Lagos, dozens of soccer fans gathered to enjoy Nigeria’s final warm up video game before the World Cup.

Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He stated he started sports betting three months ago and bets approximately 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; modifying by David Clarke)