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Booming Sports Betting Industry Excites Foreign Investors - Business Hallmark

by Efren Bohr (2021-10-26)

Nigeria’s sports betting industry has continued to attract an unprecedented level of interest, as foreign investors sought to have a piece of the over N2billion daily stakes, Business Hallmark investigations have revealed.

According to checks, the huge appetite for equity in high yielding and lucrative gaming firms has intensified lately as investors hungry for higher returns see bullish future in the nation’s gaming industry.

Available data suggests that while more than 50 betting sites currently operate in the country, over 60 million Nigerians are actively involved in sports betting, staking over N2 billion daily.

Some of the sports betting companies operating in the country include Betking, Bet9ja, Nairabet, Merrybet, Naijabet, Sporting Bet, Surebet24, and several others.

Sports betting, it would be recalled, some years back emerged as a lucrative segment in the country, leveraging on huge football culture among Nigerians. Some of the big leagues in Europe, notably the English Premier League (EPL), the French Ligue, the Spanish La Liga and the Italian Serie A have millions of fans in the country, providing Nigerians, both adults and the youths the opportunity to follow and also earn income from betting.

According to a report titled, "The gaming industry in Nigeria" by top accounting and auditing firm, PwC, obtained by BH, Nigeria is the second largest online gambling market in Africa, behind South Africa, with a Gross Gaming Revenue of $58 million in 2018. The report projects that the GGR will rise by 16% over a five-year period.

"A lot has changed within the Nigerian gaming landscape since April 2016. The gaming industry has continued to expand, benefitting fron the large and youthful population, improving internet penetration, and the increasing access to internet-enabled devices", the PwC report stated

The rise in sports betting is also aided by high unemployment rate in the country which remains remains high at 27.1% (21,764,614) at the end of June 2020, according to the National Bureau of Statistics (NBS). Underemployment rate on the other hand is 28.6%, making a combined 55.7%.

This singular factor, it was gathered, has contributed greatly to the rise in sports betting, with many Nigerians in sports betting calling it the easiest way to make money through "wealth redistribution’.

Though, there is no specific official figure, different studies by industry experts indicate that Nigerians spend over N730 billion annually on sports betting and at least two billion naira is generated daily. Data also revealed that over 60 million Nigerian punters spend over 3, 000 naira daily placing bet stakes.

"This figure does not include the poor masses who are in the majority, and who spend as little as N100 daily. With a young population of nearly 190 million, Nigeria is a great opportunity for gaming businesses", noted a booking agent with NaijaBets who did not want his identity disclosed.

"Nigerians plough about $5.5 million into sports betting every day, totaling an incredible $2 billion a year. Bet9ja, the biggest betting brand in Nigeria, returned a monthly turnover of $10 million as at 2016", said another accounting firm, KPMG.

According to KPMG, NairaBet is also mining gold from gaming, with an estimated turnover of $3 - $5 million dollars every month.

Meanwhile, betting companies are expanding rapidly in the country, with foreign firms also showing considerable interest. BH reliably gathered that out of more than the 50 legal betting firms operating in the country, more than fifty percent are fully or partially owned by foreign firms. While those that missed out in the initial hunt for equity are desperately seeking potential deals willing firms that needed liquidity.

One of such companies that has shown interest in gaining foothold in the Nigerian sport betting industry is South African pay TV operator Multichoice.

Multichoice recently announced that it acquired a 20% stake in a gambling company with major operations in Nigeria, BetKing. The value of the deal is worth R1.8 billion.

According to the Chief Executive Officer (CEO) of Multichoice, Calvo Mawela, sport betting augments his company’s business as sport is major revenue source for the company. He added that BetKing has grown fast in Nigeria and that there are plans to expanding to South Africa.

"We have a lot of sport on our platform, and many people that are betting watch more games. They plan to be pan-African and will be entering South Africa at some stage too", Mawela said.

Sources privy to the deal said it is valued at $81 million upfront, with a further $31 million performance-dependent payment possible later.

Earlier in July 2020, BetKing entered a sponsorship deal with the Football Kenya Federation (FKF). The deal is the biggest sponsorship deal in the history of Kenyan football.

Valued at $11 million (1.2 billion Kenyan shilling), the sponsorship deal will end in 2025. According to the FKF, each club in the Kenyan league will receive 8 million Kenyan Shillings a year ($1= 107.85 Kenyan shillings) thanks to the partnership.

In 2018, British online betting firm, Betway, launched in Nigeria to fight for it’s own share of the market. Likewise, Russia’s 1XBet and Slovakia’s DOXXbet have both set up in Nigeria in the last two years while Italy’s Goldbet was ahead of the trend, taking a 50 percent stake in market leader Bet9ja when the Nigerian firm launched in 2015.

Another sport betting firm that is currently making waves in Nigeria is SportyBet, recently founded by an Indian businessman, Sudeep Dalamal Ramnani. It is an international sports betting and real-money gaming operator that delivers an omni-channel entertainment experience in regulated emerging markets.

SportyBet is wholly owned by the founder who is also the chief executive officer. Sudeep is also an investor in Fintech and mobile payments and an advocate of the growing African internet ecosystem.

However, while most Nigerians believe that a well known face behind the brand, former Super Eagles player, Kanu Nwakwo, is the owner, our correspondent gathered that Kanu is just a brand ambassador and the face of the betting firm to drive customers.

On the other hand, a Nigerian owned betting firm, NairaBet, in a bid to reach the more buoyant middle class who are concerned with the stigma associated with gaming in Nigeria, employed the services of fintech giants, Paystack and Flutterwave to provide easy and affordable electronic payment platforms.

According to the Chief Executive Officer of NairaBet, the company added Flutterwave and Paystack as payment options without any fanfare, and within months the company becomes Nigeria’s second biggest betting firm, with over 4 million regular customers on its website, up from 500,000 in 2013.

"There is a gradual shift to online now, that is where the industry is going. The ease of electronic payments, cost of running shops and ability for customers to avoid the stigma of gambling in public meant online transactions has really grown our business", Alabi stated.

BH checks revealed that the sharp increase in the number of foreign betting firms working in partnership with local operators has brought the much needed funding for expansion. This in turn, it was gathered, is helping to push the nation’s economy with more revenue to the government, provision of more employment opportunities, with thousands of Nigerians now working for the operators.

Aside that, betting firms are daily forming partnerships and signing sponsorship deals with several organizations, both in the sports and entertainment industries. For example, Russian bookmakers, 1xBet, have had several partnerships with the Nigeria Football Federation (NFF) and the League Management Company (LMC), while Bet9ja, up until early 2019, were title sponsors of the Nigerian National League and the major sponsor of the recently concluded Big Brother Nigeria, tagged ‘Big Brother Naija Lockdown’.

Another fast growing betting firm operating in the country is Betking. According to BH findings, it was co-founded by a Nigerian, Adekunle Adeniji, in partnership with Byron Petzer, a German businessman. While Petzer, the real brain and financial muscle behind the outfit got the top position of CEO, former Nigerian international, Austin Okocha, was made the brand Ambassador as a norminal partner.

However, Adekunle later left the company in May 2018 due to a conflict of ideas with Petzer. In his place, Gossy Ukanwoke was appointed the Managing Director of BetKing in April 2019. Petzer recently sold 20% state to Multichoice.

Meanwhile, in order not to be left out in the jackpot, the Federal Government recently imposed taxes and levies on gaming companies operating in the country.

In 2019, the Federal Inland Revenue Service (FIRS) imposed a 7.5% value-added tax (VAT) on betting activities in the country. With the new law, bettors now pay an extra 7.5% for every stake. For example, for every N100 they stake, they now pay an extra N7.50, adding up to N107.5.