The relatively new sports betting industry has been growing rapidly, leveraging on an increase in internet penetration in the country, the increasing youthful population, and the desire to make additional income.
Though Nigerians love sports (especially football) and watch sporting events for entertainment, the love has gone beyond just entertainment now; it has also become about making (and losing) money. The multi-million sports betting industry is obviously growing astronomically, and as new entrants make their way into the market, the consumers are spoilt for choice.
On this week’s edition of product review, a weekly analysis where Nairametrics features brands contending for leadership and prominence in Nigeria’s consumer market, we bring to you the various sports betting companies in the country and how they are responding to competition in the industry, while strategically positioning their outlets for visibility and profitability.
Facts and figures
Generally, sports betting entails punters predicting the results of matches and placing their bets to correspond with the stakes of the game. If the predictions are correct, the bets are rewarded with stipulated winnings.
According to a research by the News Agency of Nigeria (NAN), an estimated 60 million Nigerians between the ages of 18 and 40 are involved in active sports betting, while almost ₦2 billion is spent on sports betting daily in Nigeria. This translates to nearly ₦730 billion in a year.
Sports betting has found its proverbial home in Nigeria as established sports betting companies are thriving, while new ones spring up daily at different corners, all with the aim of capturing market share.
A report by KPMG in 2016 revealed some startling numbers from the sports betting industry in Nigeria. As at 2016, the leading sports betting company, Bet9ja raked in an average monthly turnover of $10 million, while NairaBet made an average turnover of $3 million – $5 million, a 20 – 30% margin on profit.
Major sports betting companies in the Nigerian market
The surge in the number of mobile phone users in Nigeria has been a game changer for the sports betting business in the country. Everyday, it gets easier to pay, play and win or lose. As at March this year, the Nigerian Communications Commission (NCC) reported that there were 147 million cell phone users and 100 million internet subscribers in Nigeria, with 80 percent of this figure being able to access the internet on their phones.
Alexa, an Amazon company that commercialises web traffic data and analytics, ranked Bet9ja (bet9ja.com), a betting company, as the second most visited site in Nigeria after Google.com
Over the years, several sports betting companies have emerged in the country; these include Bet9ja, Nairabet, Merrybet, Naijabet, Bet King, Sporting Bet, Surebet24, Supabets, 1960bet, Nairastake, Parknbet, 360bet, and many more.
Competition is stiff among players in the market and the dominance of some legacy outlets (Bet9ja, and NairaBet) is being threatened with the daily arrival of new entrants (Sporting Bet, and King Bet) into the market.
Nairabet started operations in 2009; it is the first company to come up with a fully functional website where punters can deposit money, place bets and make withdrawals. The platform is also the first sports betting company to get legalised and regulated, and the Lagos State lotteries board was the first regulatory agency to develop a framework for regulating sports betting in Nigeria.
Another big player, Bet9ja is one of the most innovative market leaders, with more outlets opening every week. The platform is aggressively recruiting agents and it also provides everything the agents will need to start their own outlets including products, training and a support network.
Most Bet9ja agents enjoy commission rates on turnover for every printed ticket, and partnerships with leading sports betting software companies in Europe. The platform also has a partnership with former African Footballer of the Year, Victor Ikpeba, constant development of new betting products, integrated online betting systems, support for hardware, technical support on-site and via telephone, and on-site support from the Bet9ja field staff.
Few of the betting outlets have endorsement deals with popular athletes to promote their brands and put their products in the faces of their customers. King Bet signed Austin JayJay Okocha as its brand ambassador, while Sporting Bet signed Kanu Nwakwo as the face of its own brand.
SWOT Analysis of the market
The growing sports culture among Nigerians, growing internet penetration vis-à-vis the widespread use of mobile phones, and huge population are factors that have helped the growth of the industry in the country.
The potential for the gambling sector to cause harm in form of addictions, loss of savings, laziness and increased crime is high.
The industry has the prospects of providing employment for the young population, and cash windfall for ordinary people. It also generates tax revenue for the government and contributes to economic growth.
Some cultural and religious doctrines do not encourage sport betting activities. Although this has not disturbed Punters from making additional money through the platforms.
What customers are saying
Nairametrics’ visit to some outlets shows that sports betting has become a serious business among young Nigerian males. Findings also reveal that most people prefer placing bets through their mobile phones instead of visiting retail outlets.
Mr. Ben, a manager in one of the outlets, concurred that the industry is fast growing and has great potentials if well managed. He further stated that customers place bets more during major football events such as the World Cup and when major football leagues in Europe are in season.
The manager also pointed out that the Lagos State Government has done a lot to regulate operators in the industry.
Nairametrics spoke with Akeem, a customer in one of the outlets, who revealed that sports betting provides another means of income for him.
According to him
“I place bets here daily and it has become my side hustle. I am not afraid of placing bets because everything is risk.”
Akeem also revealed that he places an average of ₦3,000 daily and he has won over N200,000 while placing bets.
Most of the customers Nairametrics spoke with revealed some of the factors that influence their choices of brands which include the ease of play via mobile phones, and quick payment on wins.
In a poll conducted by Nairametrics, Bet9ja got 59%, NairaBet got 38% while SureBet and Merry Bet got 3% and 1% respectively.
OPINION POLL: Which Sports betting platform is your most preferred? #Nairametricspolls
— Nairametrics (@Nairametrics) October 16, 2018
The sports betting industry needs more government regulation; also, platforms looking to gain market share must leverage on technology to reach more customers.
If well regulated, the industry can support revenue generation of different tiers of government.
COVID -19 saving Nigerians millions in wedding and burial costs
As long as the pandemic persists, the ‘new normal’ is for ceremonies to remain subdued.
It was a sunny Saturday in May and like it had been for the better part of 8 weeks, the new normal was in force in Nosa’s household. The lockdown induced COVID-19 meant that all the hustle and bustle of giving attention to side hustles on weekends had all evaporated. Now he spent more time with his kids watching TV and playing video games. Whilst he has had to endure multiple weekends of lost revenue, staying indoors meant that his personal finance was still intact. But things would change dramatically this weekend.
Nosa got a call that he had just lost his aged mother to a brief illness. He had been battling with a terminal illness for years, but things seemed to be under control so her death came as a surprise. Even as he grappled with the thought of losing his mother, Nosa knew that he had to start making preparations for the expenses that are bound to come with burials in an African setting.
Thanks to the pandemic, and rules that came with it, Nosa ended up spending much less than he would have for his mother’s burial with most of the funds going towards mortuary expenses, transport and the direct cost of the actual burial itself.
READ ALSO: Post COVID-19: The Challenges Ahead
“This COVID-19 is bad but it has saved me millions of naira that I would have spent in this burial,” he remarked.
“I wanted to give my mom a befitting burial but these are hard times and I may have borrowed money just to fund this. But with COVID-19 and social distancing in place I did not have to do any of this,” Nosa informs our reporter.
Nosa’s gains translate to massive losses for a whole chain of service providers in the event management industry. Similar occurrences over the last few months have resulted in the loss of revenue for such businesses.
Events in Nigeria often cost anywhere between half a million naira to over N100 million depending on the financial muscle of those spending. Burials, weddings, naming ceremonies and birthday parties, make a burgeoning industry that spans several sectors of the economy.
From mortuaries to casket makers, event planners, event Halls rentals, professional mourners, caterers, confectionaries, party rentals, photographers, video editors, tailors, newspapers , etc, its an entire value chain of businesses that provide one service or the other for this industry.
Each of these events cost millions of naira to organize hosting as many people as the budget can support. According to a CNN article quoting a report from TNS Global, Nigerians spend as much as $9,460 for a wedding ceremony. The report also indicates the party industry could be worth as high as $17 million based on statistics in 2017.
The math can be easily deducted. Assuming 50,000 ceremonies every weekend at an average cost of N1 million that is a N50 billion per weekend or N2.7 trillion ($6.75 billion) per annum. GDP data from the National Bureau of Statistics indicates sectors that support the ceremonies market in Nigeria, telecoms, transportation, Arts and Entertainment is worth a combined N18.4 trillion.
Chuks, a Partner at a top consulting firm in Nigeria admits were it not for the pandemic his wedding could have cost him about N15 million personally and another N20 million spent by family, friends, colleagues and well-wishers. He is in his forties and his wedding had been much anticipated. He went ahead with his wedding last weekend with less than a dozen people in attendance and over 140 others logging on via Zoom. He claims while he ended up not spending millions on food, drinks, wedding halls and other logistic costs, he still achieved his goal of getting married.
Necessity they say is the mother of invention and has millions stay locked in their homes, they have resorted to apps such as Zoom, Instagram Live, Microsoft Teams to hold virtual events. These days Zoom themed parties now have their own rules and conventions. Friends from all parts of the world log in with each person taking turns to say nice things about the celebrants. Games are conducted to spice up the event and stories told by the celebrant. Music is also played by the Zoom host with participants dancing and having fun.
“It is like watching a live movie and also being part of it as the audience and participant” a wedding planner informed Nairametrics. Whilst one cannot underrate the connection physical socializing brings, virtual meetings are gradually becoming a lifestyle and the longer social distancing continues its cultural significance will only continue to increase.
Aderonke Adebamibola, CEO of Unik Ushering Agency, an Event management firm, confirmed to Nairametrics that business has really slowed down in the last few months. “Even though the NCDC has now given rules to guide weddings and other events, the budget now is way less than it used to be due to the cap on numbers of guests” she explained.
Now, most events are kept within the premises of family residences, depriving hall rentals, the money they could have made from leasing out their halls. Venue decorators also have much less on their hands to do, as they no longer have to decorate big halls.
According to Adebamibola, every single business in the chain has been affected, from caterers to ushers.
“Now, we even have to convince them to use one or two ushers for their events because they believe they don’t need ushers for 20 or 30 guests. Caterers cannot even cook a half bag of rice now because of the number of guests. This means that they are also paid less for their services, even if they expend the same energy and time” she said.
The new normal in this industry means that the things that used to be prioritized are no longer priorities. Hand sanitisers, face masks and hand washing equipment are now compulsories in events, while the hand-shaking, and hugs that would have characterized such weddings.
Due to the nature of the industry, a large percentage of the staff are kept on contract basis, so the reduction has not really translated into lay-offs. However, the industry revenue has been badly hit. A contract staff with NPU Events, who preferred anonymity, noted that in the last three months, she has only been called twice for events.
Since this forms a major part of her income, it has caused a major dip in her resources. COVID-19 has brought unwanted hardship to the Nigerian economy with small businesses and workers in the informal sector suffering the most.
A recent World Bank report indicates the Nigerian economy might contract by as much as 3% in GDP growth rate this year. This informed government’s latest decision to inject about N2.3 trillion into the economy to spur economic growth. The funds will be targeted at small businesses through non-collateralized low-interest loans. Whilst all these initiatives are geared towards stimulating the economy, the spending power of Nigerians will remain pivotal and as long as the pandemic persists, ceremonies will remain subdued.
BHH Podcast: What 2020 holds for SMEs (2) – Ugodre
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
Business Half Hour (BHH) is a weekly podcast targeted at Startups and Entrepreneurs, who are redefining the Nigerian business scene through innovation.
In this episode of #BHH, Ugodre gave an insight into how business climate would be for SMEs and an overall outlook on the global and national economy. Enjoy!
Ikeja Electric, GRA Ikeja residents sign contract to deliver 20 hours daily power supply
Ikeja Electric (IE) announced it has signed a Power Purchase Agreement with residents of Ikeja GRA to deliver “up to 24 hours of supply daily”. The company tweeted this on Friday revealing that it is in line with the company’s Bilateral Power Agreement.
However, the company representatives explain that it is a minimum of 20 hours of power supply for residents of the association. Ikeja GRA includes streets like Oduduwa, Isaac John, Joel Ogunaike, Fani Kayode, etc.
Ikeja Electric signs bilateral Power Agreement with Ikeja GRA.
…Residents to enjoy up to 24 hours of supply daily. pic.twitter.com/13ue5K1wqw
— Ikeja Electric (@IkejaElectric) October 11, 2019
In its previous Power Purchase deal with Magodo Residents, it stated that “with the agreement, IE will provide the residents with electricity supply beyond the existing standards, with guaranteed performance levels. In addition, there will also be access to dedicated Customer Care and Technical teams for prompt resolution of queries and/or technical issues within the estate.”
Also, the Chief Operating Officer, IE, Mrs. Folake Soetan expressed confidence in the success of the trend-setting agreement, which she noted was in line with the Federal Government’s willing seller, willing buyer policy.
What this means: The Power Purchase Agreement suggests residents of the Ikeja GRA will enjoy a steady power supply when compared to non-residents. However, they will have to pay tariffs much higher than is provided for in MYTO. Residents in Magodo who currently enjoy a similar arrangement informed Nairametrics that they pay higher tariffs but have enjoyed regular power supply and often go days without a power cut.
They also explain that even when the power cuts they get messages from Ikeja Electric explaining why the power was cut and indicating when it will return. We understand Ikeja Electric still relies on the grid to deliver this power as such power cuts will still be expected in the transmission and distribution end.
Backstory: In August, Ikeja Electric announced it signed a similar power purchase agreement with residents of Magodo, providing them a power supply of up to 20 hours daily. Residents of Magodo, have enjoyed steady power since then and are thought to be paying about N47 per kilowatt-hour of power compared to the MYTO tariff which is N23.10 for residential customers.
Sources with knowledge of the transaction indicate Ikeja Electric is likely to extend this arrangement to other estates within Lagos, in a move that disrupts the power sector dynamics. Residents in the Eko Franchise area seeking regular power supply have also demanded a similar deal and are ready to pay for a tariff that is higher than the MYTO approved tariff for general customers.
It is however not clear if the Nigerian Electricity Regulatory Commission, NERC has approved this arrangement.