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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting wagering is flourishing in soccer-mad Nigeria mostly thanks to payment systems developed by homegrown innovation companies that are beginning to make online services more viable.
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For years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually promoted a culture of cashless payments.

Fear of electronic scams and sluggish web speeds have held Nigerian online consumers back however sports betting companies states the new, fast digital payment systems underpinning their sites are changing mindsets towards online deals.

"We have actually seen significant growth in the variety of payment services that are available. All that is certainly altering the video gaming space," said Seun Anibaba, CEO of Lagos State Lotteries Board, video gaming regulator in Nigeria's business capital.

"The operators will choose whoever is quicker, whoever can link to their platform with less issues and problems," he said, adding that taxes from sports betting in Lagos State rose 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and certified banks.

In 2016, there were 14 million web payments worth an overall 132 billion naira ($420 million). Transactions leapt to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were nearly 10 million worth 61 billion.

With a young population of almost 190 million, increasing cellphone usage and falling data costs, Nigeria has actually long been seen as a fantastic chance for online services - once consumers feel comfortable with electronic payments.

Online gambling companies say that is occurring, though reaching the 10s of countless Nigerians without access to banking services remains a challenge for pure online merchants.

British online sports betting company Betway opened its first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It released in Nigeria in January.

"There is a steady shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the variety of fintechs, and the federal government as an enabler, has actually assisted business to flourish. These technological shifts motivated Betway to begin running in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy worked up by Nigeria's involvement in the World Cup state they are finding the payment systems produced by regional startups such as Paystack are showing popular online.

Paystack and another local startup Flutterwave, both founded in 2016, are providing competitors for Nigeria's Interswitch which was set up in 2002 and was the main platform utilized by businesses operating in Nigeria.

"We added Paystack as one of our payment alternatives with no fanfare, without revealing to our clients, and within a month it shot up to the primary most secondhand payment option on the site," said Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's 2nd most significant sports betting firm, now had 2 million routine consumers on its site, up from 500,000 in 2013, and Paystack stayed the most popular payment choice because it was added in late 2017.

Paystack was set up by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who received early stage financing in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, stated the variety of regular monthly deals it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.

"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million every month," stated Emmanuel Quartey, Paystack's head of growth.

He said an environment of designers had emerged around Paystack, producing software application to incorporate the platform into sites. "We have seen a development because neighborhood and they have actually brought us along," said Quartey.

Paystack said it enables payments for a variety of sports betting firms but likewise a wide variety of businesses, from energy services to transfer companies to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is also backed by the Y-Combinator program along with endeavor capitalists Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million in 2015.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have corresponded with the arrival of foreign financiers wishing to use sports betting wagering.

Industry experts say the sector creates about $1 billion a year and is most likely to grow faster than in South Africa and Kenya where the business is more established.

Russia's 1XBet and Slovakia's DOXXbet have both set up in Nigeria in the last 2 years while Italy's Goldbet was ahead of the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi said its sales were divided in between shops and online but the ease of electronic payments, expense of running stores and capability for customers to prevent the stigma of gaming in public suggested online deals would grow.

But despite advances in digital payments, Kunle Soname - and co-founder of Bet9ja - said it was essential to have a store network, not least since numerous customers still stay hesitant to spend online.

He said the business, with about 60 percent of Nigeria's sports betting wagering market, had a substantial network. Nigerian sports betting stores frequently serve as social centers where clients can watch soccer free of charge while placing bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, dozens of soccer fans gathered to watch Nigeria's last warm up game before the World Cup.
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Richard Onuka, a factory employee who makes 25,000 naira a month, was focused on a television screen inside. He said he began sports betting three months ago and bets as much as 1,000 naira a day.

"Since I have actually been playing I have actually not won anything but I think that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos; modifying by David Clarke)
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