Charting Nigeria's online gambling growth amid regulatory battles

Firstly, it’s imperative to note the demographics of Nigeria, which is the most populous country in Africa with well over 200 million inhabitants. According to a report from The Economist, that population is predicted to grow to 400 million by 2050, surpassing the US as the third most-populous country on the planet.

Looking closer at Nigeria’s data reveals a hugely youthful population, with figures from the World Factbook outlining that approximately 41% of people in the country are aged between 14 and under, with the average age of a person in Nigeria just 19 years old.

Taking those demographics aspects into account it’s clear to see why there is excitement over how Nigerian gambling can grow with its population to challenge South Africa at the top of the African industry.

The “huge” potential in Nigeria

With a youthful population that has a strong interest in sports, Nigeria’s gambling market has gone from having largely just local operators to now seeing some international brands making an entry, including Betano and Betway.

Olabimpe Akingba is a legal practitioner with over a decade of experience in gaming, serving as the executive secretary of the Association of Nigerian Bookmakers between January 2020 and February 2024.

Akingba is excited by the growth of the Nigerian gambling market, particularly in the online space, where increases in internet penetration in recent times have provided a big boost.

Akingba believes Nigerian gambling will continue on its upwards trajectory, saying: “We know that in Nigeria, the gaming industry continues to have huge potential.

“The growth of technology has contributed immensely to the development of the Nigeria gaming market. Now we see a lot of competition in the igaming space, which has also shaped the industry.”

Ongoing regulation battle threatens to slow growth

That’s not to say there aren’t obstacles for Nigerian gambling to overcome, however. Perhaps the most prominent of those is the current regulatory system, with the presence of both a federal regulator and state regulators causing tension.

The National Lottery Regulatory Commission (NLRC) regulates gambling at the federal level, although some state regulators refuse to recognise federal licences issued by the NLRC.

A long-running dispute between the NLRC and state regulators has also reached Nigeria’s Supreme Court, with disagreements on whether federally licensed operators must also obtain state licences. However, it’s unclear exactly when a ruling will be made.

For Opeyemi Osilojo, whose time in Nigeria’s gambling industry included nearly three years spent as brand manager at Parimatch, the regulation troubles are one of the core challenges he identifies to growth of the market. Osilojo cites the US, where states are able to establish their own regulations without federal oversight, as the kind of “clear-cut” regulatory system the operator-side is looking to have.

“Each state wants to regulate betting as they seem fit,” Osilojo says. “The challenge is that the federal government also wants to regulate the space because of revenue.

“At the moment what is obtainable is a working agreement just so that the industry doesn’t collapse and both states and the federal government get something from that thriving industry. But in terms of reaching a definite working plan, the case is still in court on how you’re going to pay for licences and some other stuff like that.”

Harmonisation is crucial

Currently, all operators in Nigeria are mandated to gain a licence with the NLRC, although Nigerian law doesn’t mention online gambling. Operators with federal licences for land-based offerings may still have to get a state licence, while online companies licensed with the NLRC are free to operate without a state licence.

The key resolution for Akingba is increased collaboration between state and federal regulators to work together and allow Nigerian gambling to fulfil its evidently huge potential.

“The way forward is harmonisation of regulations as the federal and state regulators need one another,” Akingba explains. “There is need for collaboration to properly regulate the industry.

“However, as it is right now, the challenge it poses is the burden of ensuring compliance with multiple licences for federal and state, which is burdensome on the activities of gaming operators in Nigeria.  

“Secondly, the challenge has many financial implications as national and state licences are subject to licence renewal fees and monthly gaming tax, which is why we see more operators preferring to conduct their activities online and dealing solely with the national regulator.”

Lagos to be at the forefront of Nigerian gambling

Lagos is Nigeria’s biggest city with a population of more than 20 million. Its regulator, the Lagos State Lotteries and Gaming Authority (LSLGA), has been at the heart of the dispute between state and federal regulators.

Bashir Are, the LSLGA’s chief executive, hopes the Supreme Court case will be resolved by the end of 2024. Despite the ongoing court battle, Are believes Nigerian gambling is on an upwards trajectory thanks to the youthful population and the advancement of technologies such as fintech.

While Are doesn’t categorically say Nigerian gambling is bigger than South Africa’s market, which at one point accounted for nearly half of all African gaming, he believes it will one day surpass it as Africa’s top market.

Are believes the LSLGA’s regulatory system is on a European-standard level, highlighting its work with the Malta Gaming Authority (MGA), as well as with regulators in Cyprus and the UK.

“Lagos is the benchmark,” Are declares. “It’s very open and transparent. It’s easy to come in and start your business in Lagos.

“Lagos is a country of its own, with highly educated people and internet very much available. It’s also the entertainment capital of Africa, so it’s highly promising, especially with the first esports arena in West Africa being in Lagos.”

BetKing one of the leaders

BetKing is the Nigerian operating business of KingMakers, a sports betting and entertainment group that also covers other African countries such as Ghana and Kenya.

In early April, BetKing announced a deal with Genius Sports to offer its in-play content in Nigeria for sports such as football and basketball.

Onu Abraham is corporate communications manager at KingMakers, and he sees BetKing as one of the top three players in Nigeria’s gambling market.

For Abraham, BetKing’s innovation will allow it to further consolidate its spot at the top of Nigeria’s gambling industry, saying: “BetKing is staying competitive in Nigeria by innovating their offerings and enhancing customer experiences.

“Recently, the company partnered with payment gateway platforms like PalmPay and Paga for smoother transactions and consumer experience. Their focus on responsible gambling and collaborations with local sports groups further solidify their position in the market.”

Will casino stop stagnation in Nigeria?

Innovation from the likes of BetKing should help to further grow Nigeria’s gambling market, which Osilojo felt was in danger of stagnating, with operators taking customers from the same pool due to product offerings largely staying the same.

“It will keep growing,” Osilojo explains. “I think also one of the major things is that I think there was a stagnation in innovation. Everybody was basically selling the same thing. If your unique selling point wasn’t odds, your unique selling point was how fast that you pay, it will be about the efficiency of your platform.

“But in terms of the products that we had, there was nothing customised. Everybody was selling the same thing, so that in itself did not give anything interesting to the customers.”

In Osilojo’s view, casino could provide further help against potential stagnation, citing growth in that sector during the Covid-19 pandemic and the halting of sporting events as one of the reasons for its development.

“I think there has been growth in casino in the Nigerian space,” Osilojo continues. “In some businesses I’ve spoken to, when I started in 2015, casino was contributing, let’s say, 4% to your revenue. Some people have up to about 12%-18% at the moment.”

Black market a concern

Alongside regulatory issues, the presence of illegal operators in Nigeria remains a concern, despite the wide availability of product offerings.

For Abraham, he feels the popularity of the black market varies on regulatory enforcement and market dynamics, although he also says actions are being taken to clamp down on illegal operators.

“The black market remains a concern in Nigeria’s gambling sector,” Abraham explains. “Efforts to address this issue include strengthening regulatory frameworks, promoting responsible gambling and fostering collaboration between industry stakeholders and regulators.”

In Akingba’s view, it should somewhat fall on regulators to make taxation favourable enough to encourage them to avoid straying into the black side of the market.

“It is crucial for regulators to take into account the impact of tax policies on the gaming industry,” Akingba says.

“By considering this factor, they can ensure that licensed operators remain profitable and that the channeling rate, which directs customers towards licensed operators, remains high. This way, the industry can thrive while promoting a safe and regulated gaming environment.”

In October 2023, the LSLGA issued banning orders to a group of operators offering gambling without a licence.

Additionally, Are says the LSLGA is looking for increased collaboration with other bodies to aid its attempts to halt the black market.

“We are working with the national communications bodies and financial fraud units so that we can block them and go after them beyond Nigerian borders.”

Nigeria’s elephant in the room

Nigerian gambling looks set for an exciting future, with Abraham highlighting aspects such as technological advancements, increasing internet access and a population with a strong interest in sports.

Akingba is also encouraged by the growth she is seeing and she is confident that Nigerian gambling will continue to show short-term improvements in innovation and gaming experiences, while also holding faith that there’ll be a regulation solution soon.

“In the near and longer term I hope to see harmonised regulations in the Nigerian gaming industry,” Akingba explains. “The focus will likely be on preventing double taxation and I have a strong belief that this resolution will happen sooner than expected.”

In Osilojo’s view, the aforementioned youth-dominated demographics offer a huge opportunity for growth.

“The starting age for betting is 18 and you have a lot of people within the space,” Osilojo says.

“The country already has it. You just need the right resources and the right mechanics to reach those people.”

So, while the metaphorical elephant in the room of the ongoing regulation battle is certainly still present, with a supreme court resolution potentially coming by the end of the year, Nigerian gambling looks set to continue on its upwards trajectory.