What will Africa's post Covid-19 sports betting market look like?

Africa faces mass geographical singularisation more than any other region in the world. From the Maghreb that kisses the Mediterranean to the island nation of Madagascar, there is a distinctiveness across the continent that is often blanketed as an amorphous space.

A BBC report from late March noted that sports betting sales had fallen by 99% in Uganda. Over a month has elapsed since then, with the industry continuing to struggle and little light at the end of the tunnel. But what does a post-Covid-19 world look like for African sports betting?

The same but different

You don’t want to make the mistake of labelling 54 countries as one entity. “Exactly,” agrees Betgenius’ head of business development for Africa, Will Westcott. “You have to be conscious of that when you discuss it. It is important to understand that when you talk about Africa, it is a big place with different nuances.”

There are various caveats that differentiate the betting patterns across the continent. Westcott notes that in West Africa, in-play betting represents 40% of sportsbook in the region. Compared with East Africa, “things are going to be very different,” he states.

However, Westcott denotes that there is a generalisation when it comes to language around African gambling. “When we talk about Africa, we’re talking sub-Saharan, and that’s your first rule of thumb,” he points out. The second rule of thumb is that sports betting across the continent is heavily concentrated on football.

Yahaya Maikori, co-founder of the Global Gaming Company and senior partner at Law Allianz, highlights the dominance of the sport. “Most of the gambling happens with football. Around 90% of betting in Africa is based on football,” he tells EGR Intel.

While Westcott points out that markets such as South Africa are more open to other sports like esports, and in West Africa virtuals are “absolutely huge”, it is undeniable that football is king. Elsewhere, Maikori highlights regional differences when it comes to mobile betting, which has yet to gain the same traction as it has in Europe and the US. He says: “Mobile betting has not caught on in Nigeria, [but] in Kenya mobile betting is a big thing.”

Dr Franklin Glozah from the University of Ghana takes an alternative view to the pair and instead points to homogeneity. He notes: “As most countries in sub-Saharan Africa are classified as ‘developing’, the socioeconomic circumstances of people are similar. We should not expect distinct discrepancies across Africa in terms of attitudes towards gambling, especially among young people.”

Employment, not entertainment

One commonality across the continent is the fact those that do bet see it as a social occasion and a means of escaping socioeconomic depravity – with worrying trickle-down effects. “Sports betting is a retail-based form of gambling,” says Maikori. “To bet is a social event.”

Sports betting not only allows gamblers to maintain social connections; for many, it acts as a genuine form of employment and way to break out of poverty, something Maikori expects to grow because of Covid-19. “It is going to increase with the economy under lockdown. In Europe, gambling can be used as a form of entertainment, but I don’t think that this is the case in Africa. It’s really a way of making a living,” he adds.

Westcott also notes that gambling is seen by many as a legitimate income source. “You could argue that big wins are advertised and there is definitely a perception around gambling as a form of employment as opposed to entertainment.” While there is evidently an audience with a tendency to gamble, there is a sinister underbelly of youth gambling that must be addressed.

An academic study led by Tariku Abdi in 2015 found that nearly 75% of Ethiopian high-school adolescents had gambled while 37% of those were at risk for severe problematic gambling.

Glozah explains that mass youth unemployment, which will only be further exacerbated by the coronavirus outbreak, has led to young people using gambling as a means of survival.

He says: “Unemployment, especially among the youth, is quite high in Ghana and many young people see gambling as an opportunity to make quick money to sort out their financial problems.

“Perceiving gambling as a viable means of making quick and easy money has been influenced largely by the proliferation of gambling venues physically and online,” he adds.

Westcott notes: “When young people are still part of the education system and they see this as a way in which to make money and not develop other skills, then, of course, that becomes a major risk.”

Meanwhile, Maikori squarely puts the blame for the issue at the feet of the regulators: “Regulators have totally failed in enforcing responsible gambling. There has to be focus, and that is the priority.”

Glozah agrees with Maikori, adding: “It is crucial for gambling advertising to be scrutinised effectively to ensure that advertisements are safe.”

Foreign involvement

For ZenSports CEO Mark Thomas, Africa continues to be a key expansion market for his peer-to-peer, crypto-first betting platform despite the pandemic. With more than 4,000 sign-ups across Nigeria, Kenya and South Africa, as well as a monthly average betting volume of $150,000, Thomas notes that Africa accounts for around 20% of his customer base.

He tells EGR Intel that ZenSports is “very bullish on the African market” and that his platform can offer a route, via cryptocurrency and smartphones, for bettors who have been “shut out by traditional financial institutions”.

And it isn’t just operators that are penetrating the continent; suppliers such as SBTech and BtoBet have made strategic moves. SBTech moved into South Africa for the first time with an online sportsbook deal for operator Bet.co.za, while BtoBet has expanded its supply deal with Namibian operator Allbet from retail to online.

However, major Western operators regularly fail to venture into the market, instead leaving domestic African operators to rule the roost. Westcott notes that intricacies of localised markets have been deterrents in the past. “The key here is a lot of these operators will look at the market and they don’t understand the localities,” he says.

For example, betting via USSD (mobile SIM card) in countries such as Zambia is hugely popular, with Westcott noting that foreign operators “don’t have knowledge of it” to be successful. “I wouldn’t say that there was a gold rush from guys in Europe going there. The biggest operators are still the domestic African operators,” he adds.

Thomas says the flexibility of being a young company has put them in a good position with more established firms being risk-adverse, especially in the current economic climate. “I think that they tend to not do what they don’t understand, and I think that is one of the downsides to some of those [larger] companies.”

Covid-19 conundrum

While there are national and local differences across the continent, the advent of Covid-19 has had a blanket impact upon the industry. Major sporting events have been postponed, and coupled with social distancing and lockdown measures, the market in Africa has been decimated.

With football being the leading light, the postponement and cancellation of European leagues and the 2020 European Championships comes as a major blow. “You could argue the effects have been greater than anywhere else in the world,” says Westcott.

“If you’re a bookmaker in Serbia, you probably have a more diverse customer base who are happy to bet on table tennis or squash. In Nigeria, it’s just football. When you lose that, you lose your business.”

With the Africa Centres for Disease Control and Prevention announcing recommendations for social distancing and to avoid all gatherings from mid-March, the retail-based gambling industry has suffered more than most.

Maikori says: “Revenues have totally crashed. Key markets such as South Africa, Kenya and Ghana are all under lockdown. From the governments’ perspective on Covid-19, people are not allowed to gather or go to any retail store to gamble.”

Glozah concurs with Maikori, highlighting the paradox between distancing recommendations and the key vector by which the market generates most of its revenue. “It would be difficult to practise the recommended social distancing protocols if people were to visit gaming centres and venues. Covid-19 is having a huge impact on gambling in Africa.”
With an overdependency on retail and football, these markets have invariably suffered with Westcott describing it as a “really big hit”. There are, however, glints of hope.

A post-Covid-19 world

For Maikori, a world after Covid-19 is a more regulated one that will see governments aiming to recuperate lost monies from the pandemic by targeting the gambling industry. He muses: “I think that governments and regulators will become more desperate for income so we will see them double down on enforcement and regulation to avoid leakages.”

When pressed on whether he sees operator revenue returning to the pre-coronavirus levels, he is adamant the market will have been altered beyond recognition. “It is not going to be the same sort of growth and revenue that some operators were declaring. It will be substantially reduced because there will be more taxes,” he adds.

Glozah also notes the need for greater regulation across the continent, saying: “There is room for improvement, especially as the gaming market keeps expanding in terms of operators and consumers. Definitely, we need more stringent gambling regulation.”

A clean slate and a manual reset could represent a silver lining for those who demand a better market for those involved. Westcott hopes the flickering embers of football’s phoenix resurrection will drive African revenue quickly back to pre-outbreak levels.

“I don’t think it will be a long slog. I think as soon as the Premier League comes back around, considering that is where the majority of the revenue is derived from, I would say that’ll put them in really good stead to find their feet again. Being so football-centric, they might be able to get back to where they were quicker than others across the world.”

Maikori highlights verticals such as esports, which continue to run despite the sports shutdown, as now having an opportunity to strike, but must work hard to gain traction.

“I know that some are trying to jumpstart esports in a few jurisdictions but that will take time to grow. Esports are not the ideal kind of games that the typical African punter wants to engage in. We know that Covid-19 might go on for the next two years so now is the time for esports to push for growth in these markets.”

With emerging news that SportPesa is looking to re-enter Kenya following previous regulation and tax issues, it is evident that there is life in the market despite the Covid-19 chokehold on proceedings.

Whether it is two years or 20, the Covid-19 pandemic will have irrefutably altered the gambling landscape across this great and varied continent. From youth to regulation to foreign penetration, the world will sit up and take notice of developments in an oft-forgotten space.