Impact and Potentials of Sports Betting on the Nigerian Economy

No doubt, the Nigerian sports betting market is one of the most important markets in Africa, with an estimated 60 million active sports betting enthusiastic and over 50 betting platforms operational in the country.

Sports betting a recent phenomenon that is experiencing a massive surge in Nigeria and is consequently having a significant impact on the economy. The potentials it possesses over the next five are immeasurable given the youth population expected to double by 2030 and the massive broadband connections. Thanks to the ongoing fibre optics project, expected to provide affordable internet service and the increase in financial inclusion, making it one of the sorted market to invest in Africa. Nigeria has become the second-largest online gambling market in Africa, only behind South Africa. Still, when it comes to the sports betting market, Nigeria boasts an incredible Gross Gaming Revenue of $58 million in 2018, according to a report by top accounting and audit firm, PwC. The report projects that the GGR will rise by 16% over five years.

In comparison, another report from top iGaming Intelligence Specialist H2 Gambling Capital that Nigeria GGR for 2020 Africa was 7% of the total Africa GGR for sports betting land-based and online $886.8 and $264.3 respectively. The country has over 200 million people. As mentioned, it is expected to double over the years ahead. A notable figure has been supplying to feed the betting companies. The average Nigerians are passionate about their sports, especially football, which has extended into their love affair with sports betting.

In contrast, the fact that they can make money from the sport they love so much is exceptionally appealing. The context of making quick money outside the formal economy even made it fun and entertaining even for those without love for sports; this has made the market a potential for investors an the upward surge over the next five years, particularly the iGaming betting and gambling. The proliferation of sports betting has also been aided by technology advancement penetration, the widespread adoption of mobile devices, internet connections, and affordability. Unfortunately, the country’s unemployment rate remains high, and the Covid-19 outbreak has worsened it. All this has contributed massively to the rise in sports betting in Nigeria. On a norm Nigerians invest about $5.5 million into sports betting every day, totaling an incredible $2 billion a year. Bet9ja, the most significant betting company in Nigeria, returned a monthly turnover of $10 million as of 2016, according to a report by an accounting firm, KPMG, NairaBet, closing up with an estimated turnover of $3-$5 million every month.

However, over the years the surge has attracted investors from all corners of the world which have found a gold mine in Nigeria and are expanding rapidly, with mind-boggling figures flying around. It is not surprising that recently the Nigerian government is paying attention and is considering tightening tax laws and pulling more from revenue generated by these brands. Though up until now, the government had not taken full advantage of the industry’s explosion, which may change. The Federal Inland Revenue Service (FIRS), the agency tasked with assessing and collecting tax in Nigeria, imposed a 7.5% value-added tax (VAT) on betting activities. This means that bettors will have to pay an extra 7.5% for every stake. For instance, for every N100 they stake, they will pay an extra N7.50 adding up to N107.5. Unsurprisingly both the bookies and the bettors have kicked against this plan, arguing that it will turn people away from betting and ultimately lower revenue. The Association of Nigerian Bookmakers met in Abuja in February 2020 to present their case, stating that it was impracticable to impose a tax on betting stakes.

Apart from tax, it is fair enough and quite interesting to note that betting companies have benefited the Nigerian economy in many other ways. Employment opportunities result from an increase in the numbers of betting brands operating in Nigeria, with thousands of Nigerians now working for both local and foreign companies. Apart from that, they have also created jobs by inviting people to become agents and own physical outlets. These outlets have become prevalent and have provided an excellent source of income for their owners. The shop owners also have their employees who earn income. Betting companies have also aided the Nigerian economy by forming a partnership and signing sponsorship. For instance, European bookmaker 1xbet has had a partnership with the Nigerian Football Federation. The League Management Company, Bet9ja, up until early 2019, was the Nigerian National League title sponsor, the second tier of the Nigerian league system.

Bet9ja also has a multi-million dollar sponsorship deal with popular reality TV show Big Brother Naija while the 2020 edition sees Betway as the title sponsor. The sports betting market has aided other sectors in Nigeria, meaning the market is not growing in isolation but rather moving along with other industries, notably the banking, FinTech space, and information technology and telecoms. The inter-relationship between these sectors can be best described as symbolic, with each benefiting from the other. It is evident that sports betting has been aided by improving banking and payment systems and technological advancement, but betting has also given a lot in return. Bookmakers now have affiliations with banks, payment gateways (Fintech), and telecom companies leading to a significant increase in these sectors’ activities and consequently boosting their revenue.

As sports betting continues to grow at a meteoric rate, so will its effect on the economy; hopefully, the government and the companies can reach a mutually beneficial resolution on taxation. And the Nigerian gambling market is expected to see the influx of iGaming betting and gambling over the years, considering the recent health crisis that accelerated digitalization in different sectors in the years ahead.

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