Betting Against the Odds: Nigeria's Sports Betting Industry Faces Economic Knockout

In a country where sports betting has become as common as watching football, Nigeria's multi-billion-naira gambling industry is now facing its biggest wager yet, survival.

As the nation grapples with an unstable economy, skyrocketing inflation, and a volatile currency, the once booming betting sector is on the brink of busting.

Founding fathers of the industry in Nigeria like Yahaya Maikori, who founded Global Gaming Company ltd. and doubles as the President of Nigeria E-Sports Federation, explains that despite Nigeria's sovereignty, the dollarized nature of its economy has proven to be a significant threat to the budding industry.

According to him, the Nigerian i-gaming industry is driven by worldwide software which requires almost every operator to make monthly payments to their service providers to ensure that all aspects of operations run smoothly, but this comes at a significant cost:

“Operators who were paying about $5000 for software services about 4 years ago when $1 went for about 600 naira, are now burdened with the task of coming up with the same $5000 when $1 is going for about 1600 naira; thereby eating substantially into the operator’s profit margin not to mention the cost of renting property which has gone up by 60%.”

Punters and i-gaming customers are also facing financial burdens, as the cost of inflation eats deep into their spending power.

Maikori states that the assumption that customers have a relatively insatiable appetite when it comes to sports betting, may no longer be relevant, when such customers are faced with the reality of limited spending power to meet their basic needs.

Arise, Business Anchor, Rotus Oddiri also shares Maikori’s sentiment stating that “the higher cost of living always results in lower disposable income to bet.”

Is the Nigerian I-gaming industry poised for extinction?

Maikori knows that the economic situation in Nigeria is far from ideal, however, he is not concerned that the i-gaming industry is on its way to extinction. Rather, he deems this a moment of separation whereby the strong and innovative will survive, while the betting companies that resist innovation and refuse to develop local software, will undoubtedly be crushed by the weight of the harsh economic realities.

He sees the Nigerian i-gaming industry as one which has been oversaturated with so many operators, which also contributes to some of the problems of the gaming industry. For the small players, he recommends consolidation, which will ultimately reduce the cost of their foreign exchange exposure and consolidate their player/ customer pool.  

As for the larger operators, Maikori urges them to look beyond sports betting, which is just one subsector of the gaming industry and dabble into other sub sectors like poker, which is doing so well in countries like the United States, that it is considered a lifestyle game and a game of skill. Despite the education and gestation period which come naturally with the introduction of a new subsector in the Nigerian context, he deems Nigeria ready.

Maikori is more troubled by what appears to be the resistance of the Tinubu administration, which seems dedicated to remaining ignorant about the detrimental consequences of the introduction of numerous backward policies. He narrates an ordeal which the Kenya sports betting industry faced in recent times and hopes that the Nigeria i-gaming industry will not suffer a similar feat.

“I think because tax is a good revenue stream for the government, they are oblivious about how tax regimes work. The government is trying to drive whatever tax they can to bolster their coffers. In the i-gaming industry, we’ve had so many engagements with the government consultants, and they don’t seem to understand the pressing need to resolve the issue of a regulatory framework,” he told betting news site SportsBoom.com.

“In addition, and more importantly, the government doesn’t seem to understand that in the i-gaming industry, every subsector has its own unique mechanisms. Hence, having a uniform or blanket tax law and viewing the entire i-gaming industry as sports betting- which is just one sector could disrupt the superstructure that supports the stake element of the industry.”

“For example, until about 4 years ago, Kenya was the biggest i-gaming country in Africa, next to South Africa, with companies turning over 200 million dollars averagely per month. The Kenyan government then decided to apply taxes with what appeared to be punitive intent. As we speak, almost all the i-gaming companies have withdrawn their licenses and stopped operating in Kenya

The way forward

Some financial analysts have suggested the use of tech innovations and cryptocurrency as potential solutions, but Oddiri begs to differ due to the volatile nature of crypto and is quite uncertain about which tech innovations will improve disposable income.

However, he is certain that if Nigeria were to broaden its revenue base, the country wouldn’t be so heavily dependent on oil. He also echoes Maikori’s concerns that the potential mass closure of betting companies will lead to significant job losses and higher unemployment. 

The prospect of the Nigerian sports betting industry in a decade

In spite of the numerous challenges which plague the Nigerian sports betting industry, Maikori is convinced that if some of the attention which the  Minister of Communications is currently channeling towards digital space skills development is extended to the i-gaming industry, then the industry will experience exponential growth in manpower and a significant boost in the trust in the use of local software that’s purchased using the local currency.

In the coming decade, Maikori also foresees ‘forced consolidation’ for small betting operators, but for the larger and more adventurous operators, they will more than likely explore other i-gaming sub-sectors like poker, bingo, and casinos. He also predicts that one- or two-billion-dollar betting companies will emerge from Nigeria and interestingly, Maikori envisions Nigerians in the diaspora playing the role of funders for the industry.