Online Betting Firms Gamble On Soccer-mad Nigeria

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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is growing in soccer-mad Nigeria largely thanks to payment systems developed by homegrown innovation companies that are beginning to make online businesses more viable.


For several years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have cultivated a culture of cashless payments.


Fear of electronic fraud and sluggish internet speeds have held Nigerian online consumers back however sports betting firms states the new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.


"We have seen substantial growth in the variety of payment options that are offered. All that is certainly altering the gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's commercial capital.
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"The operators will choose whoever is much faster, whoever can connect to their platform with less issues and problems," he stated, including that taxes from sports betting wagering in Lagos State rose 30 percent to 40 percent in 2017 from 2016.


That development 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 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 almost 10 million worth 61 billion.


With a young population of nearly 190 million, rising cellphone use and falling data expenses, Nigeria has long been viewed as a fantastic opportunity for online services - once customers feel comfortable with electronic payments.


Online sports betting companies say that is occurring, though reaching the tens of countless Nigerians without access to banking services remains an obstacle for pure online sellers.


British online wagering firm Betway opened its very first African service in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched 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 said.


"The development in the variety of fintechs, and the federal government as an enabler, has assisted the organization to thrive. These technological shifts motivated Betway to begin operating in Nigeria," he said.


FINTECH COMPETITION


sports betting companies cashing in on the soccer frenzy whipped up by Nigeria's participation worldwide Cup say they are finding 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 supplying competitors for Nigeria's Interswitch which was established in 2002 and was the primary platform utilized by organizations operating in Nigeria.


"We added Paystack as one of our payment alternatives with no excitement, without announcing to our consumers, and within a month it soared to the number one most secondhand payment option on the site," stated Akin Alabi, creator of NairabBET.


He stated NairaBET, the nation's second greatest wagering firm, now had 2 million regular customers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment alternative given that it was included late 2017.


Paystack was established by two Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.


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 frenetic Ikeja district of Lagos, stated the number of deals 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 each and every single month," stated Emmanuel Quartey, Paystack's head of growth.


He stated an ecosystem of designers had emerged around Paystack, developing software to incorporate the platform into sites. "We have seen a growth in that neighborhood and they have carried us along," stated Quartey.


Paystack stated it allows payments for a variety of wagering firms but likewise a large range of services, from energy services to transfer business to insurance provider Axa Mansard.


Flutterwave, co-founded by Nigerian business owner 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 in 2015.


FOREIGN INVESTMENT


Shifts in Nigeria's payment culture have actually accompanied the arrival of foreign financiers wishing to take advantage of sports betting wagering.
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Industry experts state the sector generates about $1 billion a year and is likely to grow faster than in South Africa and Kenya where the company is more developed.
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Russia's 1XBet and Slovakia's DOXXbet have both set up 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 released in 2015.


NairaBET's Alabi stated its sales were divided in between shops and online but the ease of electronic payments, cost of running stores and ability for customers to avoid the stigma of sports betting in public implied online transactions would grow.


But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was necessary to have a store network, not least due to the fact that many clients still remain reluctant to invest online.
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He stated the business, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering stores often function as social centers where clients can see soccer free of charge while positioning bets.


At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to see Nigeria's final heat 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 stated he started gambling three months ago and bets approximately 1,000 naira a day.


"Since I have been playing I have not won anything however I believe that a person day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; editing by David Clarke)