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The English Premier League enjoys a religious following in Nigeria, likewise the Spanish La Liga. But for some fans, watching the game is not enough — they must also put money on it. This has given rise to a burgeoning betting sector in the West African country.
From just one betting company 10 years ago the betting sector in Nigeria has grown to over 20, according to one online list.
One of these is NairaSpin an online betting platform, founded by Balogun Danjuma. Recently several industry players were shocked when Danjuma announced on Facebook that he would be shutting down his startup 9jabookings.com and would instead be launching NairaSpin.
When asked why he decided to venture into betting, he said he was inspired by the major investor in 9jabookings – Akin Alabi, who in 2007 started Nairabet Nigeria’s first online betting platform.
“Working from his office during the days of 9jabookings opened my eyes to a lot of things in the betting industry. Nairabet is Nigeria’s first and best sports betting company. I saw how things work and I felt I can do some of the things they are doing better,” he told Ventureburn.
According to him, the betting giant spends millions of dollars on tech including those that could be locally sourced.
‘Betting is big. If you do it well, you will make enough money to last 50 lifetimes’
“I don’t have an option than to find homegrown developers to create something that will rival what they are getting, and I paid far less than what they paid. That was how Nairaspin evolved,” he said.
Banned elsewhere, betting, a form of gambling, is legal in Nigeria although it is strictly regulated and players have to be over 18 to participate.
Chapter 22 of Nigeria’s Criminal Code Act of 1990 defines what constitutes illegal forms of gambling – roulette, dice games except backgammon, non-skill based card games, chacha and cowries games, and any other games of chance which are not favourable to the player. The act, however, permits betting businesses and racing totes to operate.
“Betting is big, it is very big and if you do it well, you will make enough money to last 50 lifetimes,” said Danjuma.
The big names in the sports betting industry, he said, make an average of 1.5-billion naira (over $4.7-million) per month and about $2-million in profit every month — which is more than what many Nigerian startups are dreaming to generate in a year. But it’s not that simple
Not that easy to operate
While presenting Nigerian startups with a brighter chance for profitability, the difficulties in entering, surviving and profiting in the market are discouraging many startups from even trying.
“Betting is hard and very risky while Nigerian entrepreneurs want to do the easy things – ecommerce, delivery, bookings and the likes. One more thing, betting is not something you learn in school, you have to be in the system,” Danjuma said.
He supported this claim by revealing that many of those that have gone on to launch their own betting platforms had once worked for Nairabet. “That’s why most of the CEOs are friends,” he added.
There are also the tough regulatory conditions and multiple bodies. In Lagos state for instance, to operate legally any betting company would have to register with the Lagos State Lottery Board and the National Lottery Board.
A betting company can be sanctioned for many things including upgrading or changing software without information the regulator. In addition betting companies are required to remit 20% of their earnings to the regulator and should keep about 50% of earnings aside as prize. In essence, if an individual plays a lottery for 100 naira, it will be split into several components.
The regulator said over 800 million naira was remitted to the regulator’s trust fund, suggesting that officially declared revenue for 2016 was over 4 billion naira. Yet operators have in the past being accused of not disclosing all their earnings.
A report in June last year on the lottery landscape in Nigeria by the Multinet Group revealed that by 2025 the industry could net an annual revenue of 1.1 trillion naira, or almost three times the estimated 350 billion naira in revenue the industry recorded in 2015.
However in the end a betting startup cannot move an inch without the approval of the regulator and failure to inform the regulator of such action could result in fines running into tens of thousands of dollars.
Said one player: “If you do anything without their knowledge, you will be dealt with and it is always by fining you. You will pay a fine if you don’t want to risk your business. They can freeze your account; they can ask you to close operation. They are merciless.”
When asked why there are tough regulatory provisions in the ecosystem, Adolphus Joe Ekpe, the director-general of the National Lottery Regulatory Commission, said the actions are aimed at protecting Nigerians by ensuring that the companies are not perpetrating fraud and that a level-playing field is provided for all citizens in order to ensure that the industry continues to be trusted by Nigerians.
“Some of the operators are not transparent, the trust from Nigerians is not there. Most of them don’t even have the financial capability to do national draws so they are just doing it in piecemeal.
“More importantly, the Lottery Commission doesn’t have the technology to monitor even the existing ones. We are still working on our IT infrastructure to be able to monitor what every operator is doing. Beyond all these, we need a conducive environment for both the operators and the regulator,” he said.
Prospects for innovation and startups
Despite the high hurdles for startups interested in playing in Nigeria’s betting ecosystem, Danjuma revealed that there are several untapped opportunities for tech startups in the ecosystem.
“Current players are not seeing innovation or are reluctant to improve which is quite understandable when you are making millions of dollars every month. What do you need to improve again?” he asked.
He believes that the betting industry in Nigeria is in need of new players.
‘A lottery license is within range of 10 to 20 million naira so you must have very deep pockets’
“We still don’t have fantasy football league in Nigeria, bitcoin betting, casino and other things they have in Las Vegas in America and Macau in China have. We only have sports betting here,” he said.
But he admitted that those new players, especially the startups seeking to play would find it very hard to break into the market.
“A lottery license is within the range of 10 to 20 million naira ($30 000 to $60 000) so you must have a very deep pocket before you venture can into it. But they don’t have to be scared since if there is a will, things will take shape,” he added.
But the bigger question is the readiness of the local market for disruption in the betting landscape.
A cross section of Nigerians that are betting –tech developers, gamers, regulators and other industry players — believe that the popularisation of the various football leagues suggest that there is an available market for disrupting betting in Nigeria — it’s only waiting for the right player to come along.
“We have a hungry market here in Nigeria. I believe if something fantastic is built, Nigerians will patronise it in multitudes, whether local or foreign, all we need is content,” Danjuma concluded.