Scott Longley – Betting on football’s coattails in West Africa

reguluspartners-scottlongleyEditorial consultant Scott Longley takes a look at the burgeoning African betting market and how football is paving a way for the industry.

Now might not be the best time to be citing statistics from Fifa to bolster an argument, but when it comes to the popularity of football in the West African nations, we can at least set some store in the World Cup viewing figures released by the world football’s governing body.

According to the organisation’s report on the global TV audience for the 2010 tournament held in South Africa (data for the 2014 Brazil World Cup is not yet available) Nigeria achieved the third-highest audience per match globally at 14.9m, behind China (17m) and Brazil (17.2m).

Whisper it quietly, but if Sepp Blatter achieved anything in his contentious career, he did harness interest in the game in Africa – and whisper even more quietly, the region’s betting operators might even be thankful for it.

The size of the television audience for the world’s biggest sporting event isn’t too surprising given that Nigeria is the seventh most populous country in the world. But it still indicates the extent to which Nigerians are potty about football. Indeed, the same can be said for pretty much the whole of the continent, and this is one of the factors that helps explain the interest being shown in the betting markets across the region.

“Africa is sports mad, particularly soccer mad,” says Gregory Parsons, director of sales for Africa at Sportradar. “Betting and the following of sports has become a source of great entertainment amongst few other options. Not many people have the infrastructure to watch sports at home, and you’ll rarely find a vacant seat in a sports-betting outlet if there are big matches on. It’s standing room only, inside and out.”

Retail betting has a number of advantages in the various markets of West Africa. “It’s more convenient to enter the shop, review all the odds and place a bet,” says Michal Glowacki, chief operating officer at SB Betting Software which has a sizeable roster of clients in countries such as Nigeria and Ghana. “It’s often the place where they can watch the match they placed bet on. And if they win, they get cash instantly.

Between them Sportradar and SB Betting work with many of the leading retail and online betting brands in the West African markets. One such is MerryBet which operates over 800 betting shops and kiosks across the country, and chief executive Opeoluwa Fashakin points out that in West Africa most punters feel happier with low stakes. “This is due to purchasing power, they play more with accumulator bets,” he says.

Filling the post-match lull

Football betting is the obvious winner in the market and is the most attractive medium due to the large audiences its televised offerings can attract and the intense interest in the games. Joe Coughlin, chief executive at London Gaming Group, another platform supplier offering into the African markets, points out that games from the major European leagues are the key offering. “But they aren’t interested in having 20,000 markets,” he says of the betting opportunities that need to be offered. “They only need a few markets.”

But as with retail betting elsewhere in the world, some product needs to be offered when games are not going on. SB Betting also works with Sportradar and other providers offering virtual games to both its retail and its online betting clients. Indeed, virtual sports is a growing revenue stream both online and offline. “Virtual betting has become very popular product, especially if is well promoted in retail stores,” says Glowacki.

Parsons at Sportradar points out that betting trends in West Africa are driven by two primary characteristics; the product (football) and the tendency for punters to prefer low-stakes/high-return bets, and particularly large multi-team accumulators.

“Products that offer either one or both of these are always going to have an edge,” says Parsons. “Punters will bet on other options but those two are for now the bread and butter of most operators. Virtual football marries these two well and is successful because as a product it doesn’t try to reinvent the wheel. Punters bet on virtuals like they bet on real sports and the virtual football facilitates this perfectly, just at a higher frequency.”

Parsons points out that Africa is actually one of the more disruptive markets in the world when it comes to launching and making a success of new product. “It is not uncommon for an African client to launch a new virtual before anyone else has globally,” he says.

However, when it comes to launching in-play betting, he suggests operators in the West African markets will face some challenges. “What I do expect is live betting to rapidly increase in the near future, and with this will come a whole new range of client needs, risk-management being one and the reason why we already have a managed trading service in place. There is very little in terms of trading skills in these markets so outsourcing this to an existing supplier makes perfect sense.”

There are other well discussed issues with offering online services into many African markets, with many operators and suppliers still debating whether Africa will go ‘straight to mobile’ and effectively jump the desktop stage, and whether there is the payments infrastructure to support the growing demand. Fashakin suggests the market is growing, but slowly. “Very few companies can boast of over 500,000 active users,” he says.

Glowacki, meanwhile, thinks the growth will come with improvements in the infrastructure.  “The online market is growing all the time. As infrastructure with continue to develop, it will become more and more popular. The last three years have changed a lot, but still online channel has huge potential. There are many payment options for customers and plenty of products not available in shops. It will take time to change the proportion of retail to online bettors, but sooner or later it will happen.”

But it is the current shape of competitive landscape on the ground that will likely determine how the land-based and online markets both develop in the near term.

Sportradar says it has 55 clients in Africa in total, and 20 in Nigeria alone, so it is no wonder that Fashakin suggests the competitive environment is getting tougher. “In West Africa the market is getting congested, so many people want to set up sportsbooks,” he says. “The existing companies are expanding, also new players are coming in, and this makes the industry very competitive. The number of punters is not statistically growing compared to rate of sportsbooks expansion being experienced.”

“The West African market is competitive now and new entrants had better have a game-plan,” says Parsons. “To get traction in a market, say for example in Lagos State in Nigeria, is no mean feat. Operators are becoming increasingly competitive in their odds offerings, as well as agent commissions and ticket bonuses being relatively inflated. Whilst pre-match margins for now remain high, start-ups face a leap of faith now more than ever before. There is still great opportunity but you need to have the right products and partners from the outset, and some reserves behind you to break through into profitability.”

Still, he maintains there are more opportunities ahead. “At the end of the day it’s about developing products that will drive our clients business forward. This is why we are always listening carefully to our clients, to try predict the next shift in regional market dynamics and have the right products ready at the right time.”

Scott Longley is a freelance journalist covering the gambling industry since 2005, working first as editor at eGaming Review and most recently as business editor at Gambling Compliance. He is currently an editorial and content consultant working with a number of businesses in the sector including Regulus Partners. He has also written extensively on investment issues for magazines such as Shares and Investment Week, particularly focusing on start-ups and early-stage investing. His current interests outside of work include (re-)reading the works of PG Wodehouse and following the misfortunes of his football team Fulham, with an equal measure of belly laughs derived from each.

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