The rise of African gaming

African markets have shown a huge ability to adapt, only recently have mobile punters in Sub-Saharan Africa transitioned to 3G connections, which is predicted to account for 60% of users by 2025.

Despite this slow uptake, technology is hugely advanced in markets across the continent, spurred on by a general distrust of state institutions and an increasing number of start-ups looking to capitalise on promising African markets.

Perhaps one of the first sectors to fully embrace this is telecommunications. Storming onto the scene in Kenya, M-Pesa changed the game for mobile payment solutions by providing a platform that bypassed the need for internet connection through SMS money transfer.

According to CEO Bob Collymore, mobile sports betting has “absolutely taken over everyone else” in terms of volume.

After integrating the technology into their sportsbook in 2017, Betika immediately saw a rise in repeat users on their platform.

“The new M-Pesa payment solution allows users on our mobile, USSD and online platform to withdraw and deposit into their betting accounts without leaving the platform, a first in the betting category,” says Betika’s brand manager Patricia Wachira.

“This has led to repeat customers who have experienced a seamless user experience from deposit, searching and selecting matches and placing bets.”

Nigeria is experiencing a similar boom in mobile betting as the number of digital payment start-ups increases.

“We added Paystack as one of our payment options without any fanfare, without announcing to our customers, and within a month it shot up to the number one most used payment option on the website,” says Akin Alabi, founder of NairaBET.

Paystack solving the problem of fragmented payments in the Nigerian market is just one example of how African start-up culture has helped cultivate the growth of the gaming industry.

With many entrepreneurs taking inspiration from the European market, the affiliate sector has witnessed a sudden burst of new entrants onto the market.

“The possibility for affiliate marketing is huge, but the opportunity has not yet been realised,” says Martin Sack, group manager of online business development at Sun International.

Founding partner at Kenyan affiliate marketing site CheckiOdds Dev Karia says the biggest challenge to affiliate marketing is educating African operators on the benefits.

“This model is tried, tested, and successful in Europe. The benefit of affiliate marketing is that you can prove your return on investment, and engage a new generation of social media users,” he explains. “The opportunity [for operators] is huge.”

Karia says using an African start-up is beneficial to several areas of the economy, not just gambling. “We understand the Kenyan mind-set better than, say, a European competitor moving into the market.”

The surge in African SMEs, demonstrated by telecommunications and affiliate start-ups in particular, is cultivating African gaming economies specifically for African punters.

Though many suppliers are Europe-based and have deals with local sportsbooks, several operators are frustrated by the lack of customisation and adaptation of their product to the African market.

“Technology providers think they’re equipped, but actually aren’t. There are tons of customisation requirements that need to be taken into consideration when applying these products into the African market that simply aren’t,” says one operator.

There are no signs of the African start-up boom slowing down. In Uganda, 28.1% of the population are entrepreneurs and Google has introduced its Launchpad Accelerator in a number of African markets including Ghana, Kenya, Nigeria, South Africa, and Uganda – jurisdictions where the gambling market has shown huge growth and potential.

Attention from international investors, distrust of traditionally state-run industries such as banking, and a desire to source suppliers locally rather than import, all contribute to the infectious African entrepreneurial spirit.

The general market mood begs a number of questions around its potential: to what extent will blockchain take hold in the gaming sector?

Are backend technology platforms next? What other sectors could impact African gambling markets? Regardless of the answers, one thing is for sure: the African start-up space is particularly interesting to watch.