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Foreign investors scramble for booming sports betting business



By Godwin Dunia

Sport betting has slowly emerged as a lucrative business segment which empowering people by creating income and employment. The apparent success in the short period of its existence seems to be leveraging on Nigeria’s huge football culture. Some of the big leagues, such as the English Premier league, and the Spanish La Liga, have millions of fans in the country and betting have been providing Nigerians the opportunity to earn incomes from what they love.

Also, an important aspect that has contributed to the rise in gaming industry has been the broadening of the customer base to include the young middle-class Nigerians, repealing the stereotype that the industry only in attracting the lower income earners. This trend has been supported by improved mobile penetration.

According to Business Hallmark investigation, data from Nigerian Communications Commission (NCC), show that mobile penetration increased from 36% to 50% in the last three years, adding to the increased awareness through aggressive expansion and marketing by operators as well as technological improvements in payment platforms. This happened, in spite of the temporary dip in economic activities since 2016.

The NCC report also indicates that a lot has changed within the Nigerian gaming landscape since the PwC April 2016 report. The gaming industry has continued to expand, benefitting from; the large and youthful population, improving internet penetration, and the increasing access to internet-enabled devices.

Also, a 2015 publication on Football betting in Nigeria, disclosed that, “most bets are placed in bet-shops while an increasing number of customers are placing bets online. In addition, Business Monitor International (BMI) research forecasts 182 million mobile subscribers in 2021, from the current 153 million. The expectation is that as the number of internet subscribers increases, so will the number of gaming users.

To some extent, the need for additional income in the face of the recent economic recession which has left a number of youth unemployed and underemployed has provided a boost to the base of gaming users in particular, especially sports betting and lotteries.

What this indicates is that, gaming has evolved since Nigerians are sport loving people and it has become easy to stake cash on what they are passionate about. They on anything and everything such as dog race, horse race, and virtually every other sports.

The betting industry in Nigeria has started attracting foreign entrants, in particular, sports betting. According to an analyst who spoke with Business Hallmark in one of the sporting outlet in Lagos, said, “Gaming content providers like Gameloft, Intralot and Sirplay have partnered with local gaming companies to participate in the growing success of the gaming industry by providing technology services and support.

For instance, NaijaBillionaire has partnered with international platform providers like Lightmaker lotto who offer payment solutions and Indus Net Technologies who develop and provide technical support and digital content”.

He also said, partnerships have become important in delivering a successful gaming experience since telecommunication and payment companies are making gaming more accessible to mobile users. For example: in the lottery segment, the Premier Bet Lotto popularly known as “baba Ijebu”, has partnered with MTN, enabling consumers to access the lottery via short codes.

Bet9ja has also recently formed a three year partnership worth N200 million with Nigerian National League to enhance the Nigerian League within the sports betting segment.

Although, the Integrated Resort Casinos (IRC) gaming in Nigeria is still in its infancy, but it has been projected to bring in a total of $49 million in revenue, due to attempts by the government to improve the ease of doing business in Nigeria, thereby attracting tourists into the country, according to PwC’s Gaming report (2015-2019).

Also, the National Sports lottery (NSL) Plc, the organiser and sponsor of Lotto Nigeria, recently deployed 30,000 i8550 POS terminals for E-payment lottery. The i8550 supports all forms of bank cards, enabling the purchase of lotto tickets through its secure terminals. In addition, betting companies are partnering with mobile payment platforms to offer attractive bonuses on stakes, thus attracting more customers.

However, to keep the trend under check against criminality, Business Hallmark confirmed that the Lagos State Lotteries Board (LSLB), has issued over 40 licenses to operators (LSLB, 2017). The Board has started to implement measures to strengthen the regulatory framework through increased transparency. These measures include providing and updating their data which includes operators whose licenses have been suspended.

Providing a safe and secure gaming environment to players is vital to the continuous success of the Nigerian gaming industry. Security of online games/plays is a growing concern especially with the increasing use of electronic channels for gaming. Online Lottery and Sports Betting operators’ process high volume of players’ transactions and it is critical that these operators ensure that they keep players personal data secure and protected from cyber attacks.


Cyber criminals may compromise a platform by installing malicious software (malware) to gather information about players from within their account. This information could include cardholder data, login details, bank account details, betting history and other personal information.

Other states are also realizing the revenue potential of the gaming industry and are taking a more aggressive role in regulating gaming activities. For instance the Edo State Internal Revenue Service (EIRS), which regulates the activities of all gaming operators in the state, has instructed all operators to update their licenses and offset any outstanding tax liabilities.

The EIRS also plans to list operators with active licenses in the near future (EIRS, 2017), in a move designed to reduce illegal gaming activities in the state.

It was also gathered that the Federal government, through the National Lottery Regulatory Commission (NLRC), has also issued licenses to operators in the industry. But this is having an overlap effect on new entrant-operators because of regulatory functions between the state and the federal level, as operators are sometimes levied twice, BH gathered.

Another federal government agency that monitors the gaming industry is the Economic and Financial Crimes Commission (EFCC). Currently, major wins by punters are reported to the EFCC by the operators.

Various betting platforms have enabled this option for punters’ accounts to help control their money. This system is currently utilized by Skybet and Bet365, amongst others in the UK and across Europe. What this implies according to an operator of Betnaija in Ikeja is that, “over time, regulations in Nigeria would gradually evolve to become more stringent, incorporating rules to minimize money laundering crimes channelled through the gaming industry”.

Gaming industry Nigeria has allowed Nigerians place bets both locally and internationally. This has proven effective, as during off-seasons in football leagues, customers could still place bets on virtual matches; which still feature their favourite teams and players.

Surebet247, Nairabet and several other operators currently host this form of gaming on their websites, ensuring punters are still engaged through virtual sports betting during seasonal football breaks.

The gaming industry has afforded the federal and states government opportunity of taxation. But the interpretation of what constitutes net gaming revenue or the tax base remains unclear and largely inconsistent. This inadvertently has a direct impact on the applicability of taxes such as value added tax (VAT) and withholding tax (WHT) (charged by the Federal and State authorities) on winnings, payments made to foreign partners, etc.

Global trends has shown that sports betting if clearly regulated, is a major sector for the generation of tax revenue by the government. This has however not been the case in Nigeria as the industry remains largely unregulated despite the existence of several Acts. As such, the issue of multiple taxation and licensing continues to plague local operators.

Also, a denial of service (DoS) attack could be carried out which could disrupt the performance of the gaming platform or even make it unavailable, leading to customer dissatisfaction, service downtime and loss of gaming revenue.

So far, another issue that is affecting the development of the industry in Nigeria according to Business Hallmark investigation is lack of structures by operators. The operators within the gaming industry lack adequate structures to support the model of the business. A number of the companies that make up the gaming space were those that evolved from the old pool culture, and these businesses were managed with limited financial knowledge depending on the clients’ base.

Another area where the industry is lacking is good management. And with this situation of lack in good management structures or clearly defined strategies for the business, operators will continue to struggle to fulfil obligations, expand and attract foreign direct investment at the right price.


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