Online Betting Firms Gamble on Soccer-mad Nigeria
By Alexis Akwagyiram and Didi Akinyelure
LAGOS, June 25 (Reuters) - Online sports betting wagering is expanding in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation firms that are starting to make online companies more feasible.
For 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 fraud and sluggish web speeds have held Nigerian online consumers back but wagering companies states the new, fast digital payment systems underpinning their sites are altering mindsets towards online deals.
"We have seen substantial growth in the number of payment services that are readily available. All that is absolutely changing the video gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.
"The operators will go with whoever is much faster, whoever can connect to their platform with less problems and glitches," he stated, adding that taxes from sports betting in Lagos State increased 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 main bank and certified banks.
In 2016, there were 14 million web payments worth an overall 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, rising cellphone usage and falling data costs, Nigeria has actually long been viewed as an excellent opportunity for online businesses - once customers feel comfortable with electronic payments.
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Online gaming companies state that is taking place, though reaching the 10s of millions of Nigerians without access to banking services remains a difficulty for pure online sellers.
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British online sports betting company Betway opened its very first African company 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 market is going," Betway's Nigeria supervisor Lere Awokoya stated.
"The growth in the number of fintechs, and the federal government as an enabler, has actually helped the business to grow. These technological shifts encouraged Betway to start running in Nigeria," he stated.
FINTECH COMPETITION
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sports betting companies capitalizing the soccer frenzy whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems developed by regional start-ups such as Paystack are showing popular online.
Paystack and another regional start-up Flutterwave, both established in 2016, are for Nigeria's Interswitch which was established in 2002 and was the main platform used by services operating in Nigeria.
"We included Paystack as one of our payment choices without any excitement, without announcing to our customers, and within a month it soared to the top most used payment alternative on the site," said Akin Alabi, founder of NairabBET.
He said NairaBET, the nation's second biggest sports betting firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment choice given that it was included late 2017.
Paystack was established by two Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early phase financing 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, said the number 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 development.
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He said a community of designers had actually emerged around Paystack, producing software application to integrate the platform into sites. "We have actually seen a growth in that community and they have carried us along," said Quartey.
Paystack said it enables payments for a variety of wagering firms however also a broad range of services, from utility services to transfer business to insurance provider Axa Mansard.
Flutterwave, co-founded by Nigerian entrepreneur 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
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Shifts in Nigeria's payment culture have accompanied the arrival of foreign financiers wishing to use sports betting wagering.
Industry specialists 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 developed.
Russia's 1XBet and Slovakia's DOXXbet have 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 company launched in 2015.
NairaBET's Alabi stated its sales were divided in between stores and online but the ease of electronic payments, expense of running stores and capability for customers to prevent the stigma of gaming in public indicated online transactions would grow.
But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was very important to have a shop network, not least because numerous customers still stay hesitant to spend online.
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He stated the company, with about 60 percent of Nigeria's sports betting wagering market, had a comprehensive network. Nigerian wagering stores typically serve as social centers where customers can watch soccer complimentary of charge while positioning bets.
At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans gathered to view Nigeria's last warm up video game before the World Cup.
Richard Onuka, a factory worker who makes 25,000 naira a month, was focused on a television screen inside. He said he began gambling 3 months ago and bets up to 1,000 naira a day.
"Since I have been playing I have actually not won anything but I believe that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)