Nigerian Entrepreneurs Found Another Goldmine in Sport Betting Business - Extending the Frontier

 

Believe it or not, sport betting business will continue to strive for a long time in Nigeria. Improving and reinventing itself... 

With an estimated 60 million Nigerians actively involved in sports betting, and over 50 betting sites operating in the country, sports betting is experiencing a massive surge in Nigeria, and is consequently having a huge impact on the economy.

Nigeria has become the second largest online gambling market in Africa, behind South Africa, with a Gross Gaming Revenue of $58 million in 2018, according to a report by top accounting and auditing firm, PwC. The report projects that the GGR will rise by 16% over a five-year period.

The country has over 200 million people, supplying the population to feed the betting companies. Nigerians are passionate about their sports, especially football, and this has extended into their love for sports betting. The fact that they can make money from the sport they love so much is extremely appealing.

The rise in sports betting has also been aided by improving technology, with many Nigerians now having access to mobile phones and affordable internet. Unfortunately, the unemployment rate in the country remains high, which has also contributed greatly to the rise in sports betting.

Nigerians plough about $5.5 million into sports betting every day, totaling an incredible $2 billion a year. Bet9ja, the biggest betting brand in Nigeria, returned a monthly turnover of $10 million as at 2016, according to a report by another accounting firm, KPMG. NairaBet aren’t doing too badly, with an estimated turnover of $3 – $5 million dollars every month.

The betting companies have found a gold mine in Nigeria, and are expanding rapidly.

With such mind-boggling numbers flying around, it is hardly surprising that the Nigerian government is looking to tighten tax laws, and pull more from the revenue generated by these betting companies. Up until now, the government had not really taken full advantage of the explosion in sports betting in Nigeria, but that may be about to change.

The Federal Inland Revenue Service (FIRS), the agency tasked with assessing and collecting tax in Nigeria, recently moved to impose a 7.5% value-added tax (VAT) on betting activities in the country. This basically means that bettors will have to pay an extra 7.5% for every stake. For every N100 they stake, they will pay an extra N7.50, adding up to N107.5.

Unsurprisingly, both the bookies and the bettors have kicked against this plan, arguing that it will turn people away from betting, and ultimately lower the revenue. The Association of Nigerian Bookmakers met in Abuja in February to present their case, stating that it was impracticable to impose tax on betting stakes.

It is important for all parties involved to reach a compromise on the taxation of betting companies, and implement these laws because the money will go a long way in boosting Nigeria’s dwindling economy.

Sports betting and its contribution to the Nigerian economy

While the tax debate continues, it is only fair to note that betting sites in Nigeria have benefited the Nigerian economy in many other ways.

Employment opportunities

The sharp increase in the number of betting companies operating in Nigeria has provided more employment opportunities, with thousands of Nigerians now working for both the local and foreign companies.

Apart from employing Nigerians into their offices, betting companies also create jobs by inviting people to become agents and own physical outlets. These outlets have become very prevalent in Nigeria, and have provided an excellent source of income for their owners. The shop owners also have their own employees, who earn their small share from the sports betting jackpot.

Partnerships and sponsorships

Betting companies have also aided the Nigerian economy by forming partnerships and signing sponsorship deals with several organizations, both in the sports and entertainment industries.

European bookmakers, 1xBet have had partnerships with the Nigeria Football Federation and the League Management Company, while Bet9ja, up until early 2019, were title sponsors of the Nigerian National League, the second tier of the Nigerian league system.

Bet9ja also have a multi-million dollar sponsorship deal in place with popular reality TV show, Big Brother Naija. Bookies have injected a lot of money in the Nigerian media, bankrolling several shows and events across radio and television.

Interaction with other sectors

Sports betting in Nigeria is not growing in isolation, but rather moving along with other industries, notably the banking, information technology and telecommunications industries. The inter-relationship between these sectors can best be described as symbiotic, with each benefiting from the other.

It is true that sports betting has been aided by improving banking and payment systems; and technological advancement (more mobile phones, better internet), but betting has also given a lot in return.

Bookmakers now have affiliations with banks, payment gateways and telecommunications companies, leading to a significant increase in the activities in these sectors, and consequently boosting their revenue.

Imagine being charged N50 for every deposit you make via Quickteller or internet banking; or being deducted N30 every time you fund your account via the mobile USSD service. Now think about the millions of deposits made into betting accounts per day. That is some serious money we are talking about.

According to Nigeria Inter-Bank Settlement System (NIBSS), there were 29 million web payments, worth N132 billion as far back as 2017.

As sports betting continues to grow at a meteoric rate, so will its effect on the economy. Hopefully the government and the companies can reach a mutually beneficial resolution on taxation. The government needs some of that money, but they must also be mindful not to create laws that will significantly hamper the growth of the companies that are operating legally in the country.