Online Betting Firms Gamble on Soccer-mad Nigeria

By Alexis Akwagyiram and Didi Akinyelure

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

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

Fear of electronic scams and sluggish internet speeds have held Nigerian online consumers back however wagering companies states the brand-new, fast digital payment systems underpinning their websites are changing attitudes towards online transactions.

“We have seen substantial growth in the number of payment options that are offered. All that is definitely changing the gaming area,” stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria’s business capital.

“The operators will go with whoever is much faster, whoever can link to their platform with less problems and glitches,” he said, adding that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That development has actually been matched by an increase in web payments, according to information 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 cellphone use and falling data costs, Nigeria has long been viewed as a fantastic opportunity for online services – once customers feel comfy with electronic payments.

Online gaming companies say that is taking place, though reaching the tens of countless Nigerians without access to banking services stays a challenge for pure online merchants.

British online sports betting firm 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 progressive shift to online now, that is where the industry is going,” Betway’s Nigeria supervisor Lere Awokoya stated.

“The development in the variety of fintechs, and the federal government as an enabler, has actually helped the service to flourish. These technological shifts motivated Betway to start operating in Nigeria,” he said.

FINTECH COMPETITION

sports betting companies capitalizing the soccer craze whipped up by Nigeria’s participation worldwide Cup state they are discovering the payment systems created by local startups such as Paystack are proving popular online.

Paystack and another regional start-up Flutterwave, both founded in 2016, are offering competitors for Nigeria’s Interswitch which was established in 2002 and was the main platform used by organizations operating in Nigeria.

“We included Paystack as one of our payment choices without any fanfare, without announcing to our consumers, and within a month it soared to the primary most pre-owned payment option on the website,” stated Akin Alabi, creator of NairabBET.

He said NairaBET, the country’s 2nd biggest sports betting firm, now had 2 million regular 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 established by 2 Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who received early phase 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 variety of monthly transactions 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 each and every single month,” said Emmanuel Quartey, Paystack’s head of growth.

He stated a community of developers had actually emerged around Paystack, developing software to incorporate the platform into websites. “We have seen a development because community and they have actually brought us along,” said Quartey.

Paystack said it makes it possible for payments for a variety of sports betting firms however also a wide range of companies, from energy services to transport business to insurance provider Axa Mansard.

Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is likewise 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 accompanied the arrival of foreign financiers hoping to tap into sports betting wagering.

Industry specialists say the sector generates about $1 billion a year and is likely to grow faster than in and Kenya where the organization is more developed.

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

NairaBET’s Alabi said its sales were split in between shops and online but the ease of electronic payments, cost of running stores and ability for customers to avoid the stigma of gambling in public implied online transactions would grow.

But in spite of advances in digital payments, Kunle Soname – chairman and co-founder of Bet9ja – said it was essential to have a store network, not least since lots of consumers still remain unwilling to invest online.

He said the company, with about 60 percent of Nigeria’s sports betting market, had a substantial network. Nigerian sports betting stores typically serve as social centers where clients can see soccer complimentary of charge while positioning bets.

At a BetKing hall deep inside the busy Oshodi market in Lagos, dozens 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 fixated on a TV screen inside. He stated he began sports betting three months ago and bets up to 1,000 naira a day.

“Since I have been playing I have not won anything however I believe 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)