Sports betting has been around since the Roman Empire. Roman emperors enjoyed gambling on gladiators for many years, with Augustus being one of the chief patrons of such gambling activities. Modern sports betting, however, originated from the one-time popular event of pedestrianism (race-walking). Pedestrianism was extremely popular in early 19th century in England and soon went hand-in-hand with gambling. Its link with gambling became so widespread that the Amateur Athletic Association was founded in 1880 to help curb race fixing and other devious tactics designed to influence the outcome of pedestrianism events.
Pedestrianism gambling soon branched into America but later declined with the advent and rise of baseball. Presently, there are a host of sporting events to bet on worldwide and with the advent of computer technology as well as the internet, the sports betting industry has become much easier, more secure and accessible to more people. This has, in turn, led to different types of bets in sports betting which include; money line, spread betting, proposition parlays, progressive parlays, teasers, if bets, run line, puck line, or goal line bets, future wagers. Head-to-head, totalizators (sometimes called flexible-rate bets), second half bets or halftime bet, virtual betting and in-play betting.
Sports Betting In Africa
Sports betting is a global phenomenon and not just restricted to America and Europe. The sports betting industry in Africa, though relatively young and growing, has proven to be viable and lucrative. Based on reports from the News Agency of Nigeria (NAN), an estimated 60 million Nigerians between 18 and 40 years of age are assumed to be spending up to N1.8 billion on sports betting daily. In the 2014 Gambling Outlook Report released by PricewaterhouseCoopers, the combined size of the betting market in Kenya, Nigeria, and South Africa is projected to be worth nearly $37 billion by 2018.
However, it is important to note that a good percentage of these numbers originate from bets placed on football matches and this is because most bets in Africa are made on football matches. You will agree with me that these numbers are indeed astonishing and therefore call for a closer look into the business of sports betting in Africa.
We will now briefly discuss the vital stakeholders in the sports betting industry and some of the opportunities that are available for investors. Like every sports betting industry, the African sports betting industry consists of the following stakeholders:
- Bookmaker: The person who takes the wages on sporting events e.g. Nairabet and respective agents.
- Linemaker/Odd compiler/Sports risk analyst: The person(s) who determine the initial odds/Lines which are usually presented in decimal points (1.80 – European format) or as a fraction (UK format) to show the potential winnings against a stake.
- Bettor: The gambler placing the bets.
- Regulatory body: These bodies govern and monitor the affairs of sport betting cooperation’s, ensuring that their activities are within the boundaries of the law. In Nigeria, the National Lottery Commissions is the recognized regulatory body.
- IT Department: They manage the sports betting company’s website and also ensure that certain bets like virtual bets and the likes run smoothly.
Starting A Sports Betting Company In Nigeria
Investors looking to generate profit from the sports betting industry in Africa can do this via two means; owning a sports betting company, or as franchised agents of an established sports betting company. The former requires capable investors with sufficient funding as it is more expensive (due to its costly perquisites). Yet, it is a highly profitable means of investing in the sports betting industry. Using Nigeria as a point of reference, the following are prerequisites of starting up a sports betting company:
Incorporate your sports betting company:
This can be done at the Corporate Affairs Commission and entails registering a company name as well as getting the appropriate Tax documentation.
Get an office space:
This is highly expedient as it is a prerequisite to getting the necessary gambling license from the National Lottery Commissions of Nigeria. My advice is that the office facilities are located in the metropolitan states of Nigeria (Lagos, Port-Harcourt, and Abuja) to reach a greater number of bettors. When the office space is ready, then one can comfortably apply for and get the required license to own a sports betting company.
While getting an office building is important to get a gambling license, it is also important because the African sports betting market consists of a demographic that needs to see a physical structure in order to trust your brand and also bet comfortably. Most of them are not internet savvy and would always prefer walking into a building and placing their desired bets as opposed to going on a website to place bets. Nevertheless, having a website is still viable as more computer savvy Africans prefer to do their betting online.
One should also consider franchising as a means of having more betting outlets. By this I mean giving interested individuals the rights to provide customers with betting services using your brand name. Franchising has proven to be a successful method of proliferation in the sports betting industry and has made it easier for huge sport betting companies to reach more customers even in the most rural of areas.
Promote your brand:
To adequately compete in the sports betting industry, promotion of your brand is highly essential. This can be done via catchy advert placements or commercials on popular Television and Radio channels as well as daily newspapers. Billboard adverts, road shows, and flier distribution are also viable means of promoting your sports betting brand.
Starting As A Franchised Agent
On the other hand, investors with limited funding can adequately partake in the wealth of the African sports betting industry as franchised agents of already established sport betting companies. This simply requires a conducive location, necessary computer gadgets and a relatively small amount of capital. Here, the sports betting company will be contacted by the interested individual and if he/she agrees with the terms they offer and has also made the above-listed essentials available, the deal is as good as done. The investor will earn a profit based on an agreed percentage of bets lost by customers. The sports betting company bears the brunt of customer winnings but the agent is usually required to pay customers their winnings and be reimbursed by the sports betting company.
The goal of every sports betting company is to make sure it makes enough money from the losers to reward the winners, and still earn a healthy commission on top. To accomplish this, sport betting companies use a mix of simple and complex strategies to fix the odds of every bet and ensure that the income from losers balances out the payouts for winners. In this industry, the operators are basically the owners of the business and franchise to agents based on an agreement. The operators further pay the agents certain percentage on deposits made and bets won. The players place bets by registering online, crediting their account and then placing bets or walking into any agent outlet.
It is important to note that the lucrative nature of sports betting has led to it being highly competitive. Newbie betting companies can use strategies like giving high bonuses, more favorable odds and employing the services of stars in the entertainment industry to enhance public image, hence improving advertisement and marketing, as earlier discussed. These methods have however been applied by existing sports betting companies, so in other for a new startup sports betting company to carve a niche for itself and thrive in this highly competitive industry, innovation has to come into play. By innovation, I mean exploring ideas in sports betting relatively unfamiliar to competitors. Two excellent ideas are eSports betting and entity betting.
ESports Betting And Entity Betting
In eSports betting, bettors place bets on sports gamers online and win or lose based on the performance of the gamer on which they bet on. A good advantage of eSports betting is the fact that it is not necessarily restricted to sports games, adventure games and mission games are also permissible. Another advantage is that it means of youth empowerment and employment. This is because the target group in eSports betting are youths.
Although computer hacking and legalities are cons of eSports betting, it is still a lucrative venture (an estimated $8billion bets is accrued annually and this has been predicted to increase to $30billion by 2020). Entity betting on the other hand, operates like a mutual fund for gambling. Here investors (bettors) give money to a professional sport betting cooperation like Nairabet (or the new startup company) that bets on a bunch of games over the course of the year.
One main difference that contrasts it with a typical investment is that the investor has no say in how the bets are made. The fund manager is the one who gets to decide what the bets are. The bettors here hope for the betting companies to be right about 55-60% of the time, and earn a piece of that return. Like eSports betting, entity betting is relatively untapped and can be very lucrative.
All these being said, the decision ultimately lies with the individual if they choose to own a sports betting company or become an agent of an already established one. All I can say is this; the sports betting industry in Africa is thriving one and though it comes with its risks and demerits, it remains lucrative and is definitely a viable means of wealth creation.