Online Betting Firms Gamble on Soccer-mad Nigeria

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By Alexis Akwagyiram and Didi Akinyelure

By Alexis Akwagyiram and Didi Akinyelure

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LAGOS, June 25 (Reuters) - Online sports betting wagering is expanding in soccer-mad Nigeria largely thanks to payment systems established by homegrown technology companies that are starting to make online businesses more feasible.


For many years, mobile payments stopped working to remove in Nigeria as they have in countries such as Kenya, where Safaricom's M-Pesa money transfers have actually cultivated a culture of cashless payments.


Fear of electronic scams and sluggish web speeds have held Nigerian online consumers back but sports betting companies states the brand-new, quick digital payment systems underpinning their websites are changing mindsets towards online deals.


"We have seen considerable growth in the number of payment solutions that are offered. All that is certainly altering the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.


"The operators will choose whoever is faster, whoever can link to their platform with less problems and glitches," he said, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

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That growth has actually been matched by an increase in web payments, according to data from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and licensed banks.


In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions jumped to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were almost 10 million worth 61 billion.


With a young population of nearly 190 million, rising mobile phone usage and falling data costs, Nigeria has actually long been seen as an excellent opportunity for online businesses - once consumers feel comfy with electronic payments.

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Online gaming firms state that is happening, though reaching the tens of millions of Nigerians without access to banking services remains an obstacle for pure online merchants.

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British online sports betting 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 progressive 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 federal government as an enabler, has actually assisted business to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he said.

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FINTECH COMPETITION


sports betting companies capitalizing the soccer frenzy worked up by Nigeria's participation in the World Cup say they are discovering the payment systems developed by local start-ups such as Paystack are proving popular online.


Paystack and another regional start-up Flutterwave, both established in 2016, are offering competitors for Nigeria's Interswitch which was set up in 2002 and was the primary platform used by businesses operating in Nigeria.


"We included Paystack as one of our payment alternatives without any excitement, without revealing to our clients, and within a month it soared to the top most used payment alternative on the site," said Akin Alabi, founder of NairabBET.


He stated NairaBET, the nation's 2nd biggest sports betting company, now had 2 million regular clients on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment choice because it was included late 2017.


Paystack was established by 2 Nigerian computer system science graduates, Shola Akinlade and Ezra Olubi, who received early stage funding in Silicon Valley's Y-Combinator program.

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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 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 each and every single month," stated Emmanuel Quartey, Paystack's head of growth.


He said an environment of developers had actually emerged around Paystack, developing software to integrate the platform into websites. "We have actually seen a development because neighborhood and they have actually brought us along," stated Quartey.


Paystack stated it allows payments for a number of sports betting firms however likewise a large range of services, from energy services to transport companies to insurance company Axa Mansard.


Flutterwave, co-founded by Nigerian entrepreneur Iyinoluwa Aboyeji, is also backed by the Y-Combinator programme 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 accompanied the arrival of foreign investors intending to use sports betting.


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 actually both established in Nigeria in the last 2 years while Italy's Goldbet was ahead of the trend, taking a half stake in market leader Bet9ja when the Nigerian company released in 2015.


NairaBET's Alabi said its sales were divided between shops and online but the ease of electronic payments, cost of running shops and ability for clients to prevent the preconception of gambling in public implied online deals would grow.


But despite advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - stated it was essential to have a store network, not least due to the fact that numerous clients still stay hesitant to spend online.


He said the company, with about 60 percent of Nigeria's sports betting wagering market, had an extensive network. Nigerian wagering shops often function as social centers where customers can view 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 enjoy Nigeria's last heat up game before the World Cup.


Richard Onuka, a factory worker who earns 25,000 naira a month, was fixated on a television screen inside. He stated he began sports betting 3 months ago and bets up to 1,000 naira a day.


"Since I have been playing I have actually not won anything however I think 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)

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