Introduction
The sports betting sector in Nigeria is estimated to be a N500billion – N1trillion Naira (over USD $1billion) market, the sports betting and gaming sector has experienced unprecedented and unanticipated growth in recent years, catapulting itself into standing as a key industry in the Nigerian economy.
A small indicator from the report created by Afriscaper provides insight into this reality – The Casino Segment provides the only comprehensive data for Nigeria as the industry still lacks sophistication, regulation and could improve in certain aspects of legislation. The Casino segment estimated at about 10% of the total legal gaming/gambling sector accounted for tax in the region of $5million circa 2016/2017.
The rapid acceleration of technological development and acceptance of online payments as against cash, has contributed to a rising culture of acceptance within a quite wide customer base in Nigeria, which has propelled the industry forward – key progressive roles these two platforms have performed in other established industries, Nigerians know a lot about.
The industry has continued to boom, leading to increased payouts and commissions for agents, improved customer service and payments of winnings to players and taxes to regulators. These improved bouquet of service levels and offerings, allied with technology and sleeker electronic payment channels, have created seamless ecosystems and resourcefully elastic enterprise foundations, ripe for scaling up. Literally everybody on the supply side of the Value-Chain are all smiling.
However……
Despite increased regulation and other negative macro-economic factors affecting the income of individual Nigerians, the industry has continued to grow. Infact, millions of unemployed Nigerians view the legal betting sector as an identifiable source of regular, sustained and structured means of making money. Fears as regards as the effect of declining economic growth on spending money for legal betting have largely become unfounded.
The Present & Emerging Landscape
Several drivers have propelled the sector into growth areas to emerge as the fastest growing sector of its kind in Africa. With Virtual Gaming becoming more acceptable and a solid income source, contributing significantly to the bottom line, we can project that plays in this area may become as big as normal sports wagering.
For the Lotto segment, which historically and presently prevails among the lowest-earning cadre as regards profile of players, we expect this customer base to remain loyal. A large trend of increased participation from the Eastern part of Nigeria has started to indicate a culture becoming more established and has become a hotspot for operators.
Confronted by another potential recession from the Covid-19 which has crashed oil prices and budgets, the Nigerian economy shall face serious problems over the next 6-12months. Unemployment levels are already on the rise and expected to continue. We can reflect on the most recent official economic recession Nigeria faced in 2016 – this merely injected growth into the Nigerian Betting sector as correlated in the previous paragraph.
The expansive nature of its agency network via franchise arrangements and utilisation of outlets as a key strategy of service & product distribution and providing channels to reach its customers remains stable.
Sports Betting Is One Of Nigeria’s Growing $1billion Industry That Leverages Technology
Despite the prevalence of outlets and the agency network locations, which are driven by factors including socio-cultural and entertainment needs to physically interact by players while wagering, the sector operators have successfully moved several of their subscribers to online channels.
A single large scale sports betting operator can impressively boast of over 2million subscribers on its platform.
Several of these companies have uncomplicated corporate structures, with the complexity existing within their operations. Hence staff-overheads are not top heavy.
Emerging trends also see partnerships and ecosystem plays – creating synergies among betting companies, telecoms operators, financial institutions and technology platform providers. We have also seen entry of international betting brands like Betway, IXBet to operate into the Nigerian market.
Technology – Rolling The Dice, Pulling The Strings and Making Cash
Prior to this new drive in technology, the industry was largely confined to the agency/brick & mortar model. Gradually and in very recent years, the sector has seen a growing acceptance of “invisible money” – payment via technology, while regulation has strengthened confidence in the industry and the regulators are doing their best to catch up with the evolvement that charts different directions everyday.
Other key drivers include mobile internet penetration. According to GSM intelligence, Nigeria will potentially contribute 4% of the estimated 700 million new global mobile subscribers, making it the only country in Africa marked with a significant contribution to increasing mobile penetration in the world. By this quota, it is expected that 28 million new mobile subscribers will emerge from Nigeria between 2019 and 2025, that is, an average of 7 million new mobile subscribers annually, if the country is to meet its quota.
In the modern business world, the tech sector on its own stands alone with the highest prospects for growth from a futuristic point of view. Presently, it also represents the biggest game changer. Gambling operators are savvy enough to understand and recognize this crucial trend and adjusted their business models as required.
The proliferation of technology has allowed a deeper offering of services to a wider spectrum of customers.
In the sports betting sector, increasingly, we can see an integration of technology into their operations, service delivery, and customer channels, and seamlessly moulded this into the vein of creating a competitive race to remain sustainable and relevant in the industry. Gradually, in terms of competition driving upwards the quality & depth service offerings, we see similarities to the Telecoms industry in Nigeria.
Innovation & technology have become entrenched in Sports Betting and Legal Gaming, and is a blockbuster frontier for competition. It swings in different directions – the sports betting utilise technology to battle themselves, and chip into external segments such as online casino gaming, and the lotto segment. In retaliation these other segments are quickly strengthening in the mobile device and technology channel race, inspiring inventiveness that will continue to push upward, industry wide growth. It has become critical to success in fulfilling payouts to agents and redeeming winnings to players. To the extent that “old school” titans such as the famous Baba Ijebu (Premier Lotto) have joined the technology digital race.
While in some industries, such as agriculture & healthcare, technology has yet to become a top tier priority, within the framework of assessing how participants target increased market share, ease of scalability and automating operations, the betting industry now sits on this pivotal block as a means of measuring their performance and potential. It is quote safe to say that the benefits to the betting operators reads excellent when stacked against their investments in technology. These enterprises largely deploy their enterprises strategy via tech, and now represents a critical success factor and is set to continue as a key driver to the growth.
Other Considerations
Ammunition for growth continues to be overwhelmingly organic, especially as regards investments in technology. Branding is also a fierce driver of competition, as loyalty plays a big factor for customer engagement, in addition to perception of operator’s policy and action on paying winnings and agents’ commissions.
Several Betting companies have endorsement deals with popular athletes and entertainment celebrities to promote their brands and popular Nigerian football heroes, easily recognisable by millions of Nigerians, represents another intense area of competition. This creates significant pull towards individual brands, and has largely become the norm, especially when advertising through visual media. BetKing signed Austin JayJay Okocha as its brand ambassador, while Sportingbet signed Kanu Nwakwo as the face of its own brand. Bet9ja is represented by Victor Ikpeba. All of these are ex-footballers with huge pulling power and social media presence.
In terms of customer base – this broadening horizon stretches from un-educated low-income workers, retail market operators to higher institution students, to blue-collar cadre. The most interesting emergence involves the rise among white-collar workers, who have the discretion and easy access via their mobile devices, laptops and desk-tops. It is very common to see these white-collar players wagering in their offices while at work during office hours.
Challenges & Outlook
- Regulation, social/religious acceptance based on culture and religion in areas such as the North of Nigeria, depending on an innovative culture to maintain relevance in the face of a blistering tempo of evolvement of several external factors such as competition & customer behaviour
- Regulators expected to increase the Capital base and monitoring, especially for the online services
- Role of Association of Bookmakers should also become more influential
- All stakeholders in the value chain should also explore how the sector can emerge as a vital source of attracting foreign exchange, CSR and community development
- The proliferation of technology leverage by operators and the acceptance and utilisation by the market, especially through mobile devices and the internet, provides encouraging basis for investment. We suggest potential investors take a closer look at this growth sector
- Challenges will also include adapting to new industry regulations, even as the operators up their game and become more structured and increase capacity
- The importance of technology is further tied to the rise of Virtual Gaming as a main contributor to operators’ bottom line. When we consider that one of technology’s most differentiating characteristics for other industries, involving a pull-back on human interaction, it provides a clear and natural navigational direction the sector has mapped for itself, via the preferences of its paying customers
- Anticipated trends in the industry include added investments in expansion of existing products/services and platforms, improved regulation and increased penetration of other sectors outside sports betting via mobile devices
Report available via United Kingdom based – Research and Markets platform – the world’s largest market research store https://www.researchandmarkets.com/reports/5031401/nigeria-sports-betting-sector-report-20202021
For discounted copies, contact us directly – tunji@afriscaper.com
