Understanding what is happening on the ground is any given market is often said to be one of the keys to success in the gambling world and nowhere is this more evident that on the continent of Africa.
Across the sub-Sahara from the Francophone west to the English-speaking countries of East Africa and down to the Portuguese-speaking eastern coastal regions, betting operators are making their mark on the continent and at the forefront of this move is Editec.
The company now has operations in 22 countries from Senegal and Ghana through to Uganda, Kenya and Mozambique, operating 50,000-plus points of sale, from large game centre betting shops through to smaller outlets and corner agents. With its heritage in providing lottery services and equipment, Editec is skilled at working within the parameters of each country it works in, which means utilising hardware which can cope with frequent electricity outages and breaks in online connections.
Infrastructure issues haven’t stopped Editec growing its business and it expects to handle 2.5 billion bets across its network in 2015. It may be only low stakes, but it is definitely high volumes, and with online operations on the verge of being launched online it is set to increase even more.
Speaking about how the company identifies the territories it wishes to target, Simon Burrell, head of business development, points out that knowing the geography to any given territory is vital. “We look at very specific areas in each territory we are targeting in terms of demographics and the urbanisation of the major cities,” he says.
“Because our hardware and software are unique, we know we can cope with some of the differences in the African landscape. Going to Malawi, for instance, you know the power is patchy, internet connections are difficult. We will be the first sports-betting operator there. We are educating the market and we can corner the market.”
Burrell points out the Editec business model looks at the areas with the densest populations and with the highest areas of footfall. “These are places that people wouldn’t normally go,” he says. “That’s one of the key aspects; understanding how people work, how their minds work and what the best product range is.”
As with other markets, competition is already stiff. “Most countries will have maybe three or four operators working,” notes Burrell. “In Kenya the regulator will tell you there have issued 19 licences; in Uganda you have maybe 24 to 25 but with 40-odd unlicensed operators; in Nigeria it is unquantifiable how many operators there are; you have one state that actually issues licences. In Ghana there are 17 operators, in Cameroon there are four.”
Still, this is by no means a market like any other European jurisdiction. There are complexities that mean that talk of generic opportunities are meaningless. “There is no one-size-fits-all,” he points out. “You can’t spend millions on marketing, it really isn’t an option, 90% of the population don’t have electricity all the time; and if they do you can bet they won’t have a television. Mainstream media is well read, but print runs are small. Radio is stronger than in Europe. Aligning your content with a relevant proposition is critical.”
That proposition is all about football. “When live football is on, the shops are absolutely packed,” Burrell says of the game centres Editec runs in its bigger markets such as Nigeria. “On a Saturday afternoon there will be four or five matches live in the shop. Our audience will not have a TV at home, People will come in all day and watch TV, and not have a bet at all.”
Naturally, as far as actual punters are concerned this poses a problem when there isn’t live football on offer – an issue solved by virtual sports and racing. Editec runs its own offering for the virtual horseracing and greyhounds and uses Sportradar for the football. “It’s a growing revenue stream,” says Burrell. “It’s the instantaneous nature of it; the instant gratification. They can play and, if they win, they can get their cash straight away.”
Now Editec is taking its experience into the online arena and perhaps surprisingly, Burrell says the offerings will be mobile-first. “Smartphone penetration in Africa is still single-digit percentage, and the majority of people have a feature phone, a small Nokia, so the majority is text-driven,” he says.
“But what we have is very different socio-economic groups. And where we have higher socio-economic groups, smartphone penetration is much higher, and they can also afford the data charges. We anticipate from an online perspective, our existing customer base is unlikely to be our core online customer.”
At present, Burrell doesn’t expect the online proposition to be any different to the land-based business with a customer base that is likely to be only interested in football, but he thinks that might change. “We are very interested to see what happens in the mobile-first strategy,” he says. “It’s a different customer base. We think they will be slightly more cosmopolitan in their punting habits.”
For all the progress Editec is seeing as far as the consumer is concerned, there are still issues around regulation and taxation that can force operators to take the odd step backwards in amidst of all this progress. One is the tendency for governments in certain part of the region to look to levy withholding taxes on gambling operators, and often with barely any notice.
“In Tanzania, we got a missive recently about a new withholding tax,” says Burrell. “We have 3,000 POS, plus our shops, you can’t just flick a switch to do this. To implement this kind of thing, we have to recall them, it’s a huge country. We’ve lobbied but the industry is still in it’s infancy there and the government see tax revenue rather than the future of the industry. We employ over 1,000 people, but you have to consider whether it is worth operating when the playing field can change so immediately and beyond your control.”
This last point, however, is true the world over, and proves the point that in some senses Africa has already emerged as a key market. The market maybe the Congo but the aim as Burrell says, remains the same – to “enable people to bet on Arsenal to win on Saturday”.