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 mostly thanks to payment systems developed by homegrown technology companies that are starting to make online companies more practical.

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

Fear of electronic fraud and sluggish internet speeds have actually held Nigerian online back however wagering companies says the brand-new, quick digital payment systems underpinning their sites are changing attitudes towards online transactions.

"We have seen substantial development in the variety of payment solutions that are readily available. All that is definitely changing the gaming space," stated Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's industrial capital.

"The operators will choose whoever is much faster, whoever can connect to their platform with less concerns 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 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, rising cellphone usage and falling information expenses, Nigeria has actually long been viewed as a great chance for online businesses - once consumers feel comfortable with electronic payments.

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

British online sports betting company Betway opened its first African business in Kenya in 2015, followed by Uganda, Ghana and South Africa. It introduced in Nigeria in January.

"There is a steady shift to online now, that is where the industry is going," Betway's Nigeria manager Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has helped business to prosper. These technological shifts motivated Betway to begin running in Nigeria," he said.

FINTECH COMPETITION

sports betting firms capitalizing the soccer craze whipped up by Nigeria's participation in the World Cup say they are finding the payment systems created by regional startups such as Paystack are proving popular online.

Paystack and another regional startup Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was established in 2002 and was the main platform used by services running in Nigeria.

"We added Paystack as one of our payment choices without any excitement, without revealing to our consumers, and within a month it shot up to the top most secondhand payment choice on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the country's 2nd most significant wagering company, now had 2 million routine customers on its website, up from 500,000 in 2013, and Paystack remained the most popular payment choice considering that it was included in late 2017.

Paystack was established by two Nigerian computer science graduates, Shola Akinlade and Ezra Olubi, who got 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 mad Ikeja district of Lagos, stated the variety of regular monthly 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 every month," stated Emmanuel Quartey, Paystack's head of development.

He stated an environment of developers had actually emerged around Paystack, producing software to incorporate the platform into sites. "We have actually seen a growth in that neighborhood and they have actually brought us along," said Quartey.

Paystack stated it enables payments for a number of sports betting companies but likewise a vast array of organizations, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator program along with 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 hoping to use sports betting.

Industry professionals state the sector produces about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the company is more developed.

Russia's 1XBet and Slovakia's DOXXbet have both set up 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 split between stores and online but the ease of electronic payments, expense of running stores and capability for customers to avoid the preconception of gambling in public suggested online transactions would grow.

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

He said the company, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian wagering shops 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, dozens of soccer fans collected to enjoy Nigeria's final warm 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 said he began gambling three months earlier and bets approximately 1,000 naira a day.

"Since I have been playing I have actually not won anything however I think that one day I will win," said Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)