Into Africa? Betting on an untapped gambling frontier

Home to over one billion people, making it the second most populated continent, Africa is generating growing interest as one of the world’s great untapped gaming frontiers.

Although casino gambling makes up the bulk of the market at present, growth in internet usage and in particular mobile, is expected to lead to a boom in online gambling. While some of the European majors have already ventured in, some experts say Asian investors may have an edge when it comes to their business approach.

In a recent study, PwC analyzed the market in South Africa, Kenya and Nigeria. It found South Africa has by far the largest overall gambling market with, gross casino gambling revenues of R17.2 billion ($1.6 billion) in 2014 compared with R497 million ($46 million) in Nigeria and R218 million ($20 million) in Kenya.

However, when it comes to growth, Nigeria was the best performing up 17.5 percent, compared with 4.5 percent in South Africa and 7.4 percent in Kenya.

Yet this is a sports-crazy region of the world, particularly when it comes to football. Already the second-biggest component of the market, sports betting is likely to be a key beneficiary, especially as technology improves.

At present, Africa lags far behind other parts of the world from an online gambling perspective. In fact, Global Betting and Gaming Consultants (GBGC) estimates that the continent accounts for just 2 percent of worldwide interactive revenues. “So far, population growth has not equated to economic prosperity, so large portions of the population do not have the disposable income to get online at all, and then have any income to spend on recreations like gambling,” GBGC director Lorien Pilling said.

For Asian operators willing to take a gamble on Africa and go up against the established and trusted local brands, industry experts warn that this vast continent isn’t a homogenous market; it’s a nuanced landscape with online and land-based gambling spread throughout the Sub-Saharan region. Key markets include South Africa, Tanzania, Kenya, Uganda, Ghana and Nigeria – the latter boasting a very competitive and well-developed igaming industry.

Until recently, there was scant igaming regulation in most countries but the situation is changing, while international heavyweights like bet365, Mr Green, Mybet and many more are present in the region.  

However, director of Global Gaming Africa, says the big overseas brands, particularly those from Europe, haven’t exactly taken the continent by storm. “European gaming firms haven’t really set the world ablaze in Africa because of their need for everything to be black and white and regulated, as well as not understanding the local market,” he says. “This is where Asian firms can take a march on the European companies to push their market entry. As we know, when Asian firms come to Africa even in other sectors they come big and then help formalize the regulation, whereas European firms are too set in their ways sometimes and are missing out on the opportunities in the market.”  

Asian sportsbooks have established a reputation for accepting football stakes and bet volumes that dwarf anything the major European bookmakers lay. Yet there would need to be a willingness by Far East operators to adapt their model for African markets, Pilling suggests.

“Football is still the main betting sport, just as in Asia, but there is little evidence of interest in Asian handicap betting. It is 1×2 [home, draw, away], like Europe. Some Asian firms offer a lot more 1×2 than they used to but it would need to be their main form of betting in Africa.” Pilling also points out that minimum bet limits for current African operators are also low, while many local operators offer a combined retail-online service. For example, bettors can print off a coupon and take it to a betting shop to place the bet with cash. “Is this a model that an Asian operator would be willing to get involved with?” he asks.

Unlike the rest of the world, igaming in Africa has largely leapfrogged desktop and gone straight to mobile. Aside from South Africa, mobile phones are the primary devices for connecting to the internet.

These phones tend to be older models running the Opera Mini browser, which means Asian igaming operators will struggle, at least for the time being, to generate significant revenue streams from verticals requiring a large screen size and adequate horsepower, such as casino, live casino and poker. Furthermore, credit and debit card penetration is very low, though the mobile wallet industry is booming. This means it’s essential for online operators to partner with mobile wallet providers like MTN, Tigo or Paga. “The mobile market is the Holy Grail for gaming in Africa,” says Kamara, whilst adding: “Africa has made leaps and bounds in mobile and mobile payments.”

On top of these challenges, there are different cultures and languages to contend with, levels of income vary wildly, and some countries face political instability, possible social unrest and even war. But despite all this, Kamara is extremely upbeat about Africa’s potential. “I am very bullish about the future of gaming in Africa. We can already see trends of growth in various markets and also as more regulations come into place we will see a thriving market for the gaming industry. Countries Like Nigeria, Kenya, Ghana, Uganda, DRC, Mozambique and Tanzania are leading the way in the gaming market with lots of innovation around mobile.”

Joe Coughlin is CEO of the London Gaming Group, a supplier of gaming platforms for various African markets. His advice to Asian online operators is not to approach Africa with a one-size-fits-all strategy. “You can’t use a cookie-cutter approach with Africa, so you can’t take a successful product from Asia and Europe and shoehorn it in.” He also doesn’t envisage much other than sports betting succeeding – for now. “It’s difficult to imagine online casino, poker and bingo being anything other than niche until the average device profile in Africa improves, but the good news is that is already happening and in the medium term I expect some of those products to be very successful.” Overall, though, he also believes internet gambling in this part of the world is poised to take off. “There are definitely major opportunities throughout Africa. Practically every Sub-Saharan country has great mobile penetration, a passion for football and lotteries, young populations, and getting more affluent every day. So the big picture for online gaming operators is very good,” he concludes.