Product focus is needed to succeed in Kenya’s volatile regulatory conditions

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Kenya’s betting and gaming market has seen a number of regulatory challenges in recent years, particularly with regards to tax, but the sector still holds many opportunities for operators.

In a panel at the SBC Digital – Africa event – sponsored by PM Affiliates and bet.games.tv – David Moshia, Managing Director of Gaming Advisory Africa, moderated a conversation between four industry experts, who outlined the keys to Kenyan success as well as the opportunities and regulatory challenges the market presents.

Dominic Field, Country Manager for Nigeria at Live Score Group, started the discussion, highlighting the opportunities and challenges present in the Kenyan betting space.

“I think there’s definitely money to be made,” he began. “I’m quite sure that my colleagues on this panel will share insight into the opportunities to make money there. But I do think because of the volatility of the regulatory environment and other factors you do have to be a bigger organisation, set up to absorb it if it goes wrong, which it could go wrong.

“And I think also if you’re going to come with a unique product, if you’ve got something that allows you to differentiate yourself in what is a very competitive field, then absolutely, I think it can be great.”

However, Field observed that regulatory changes had impacted Kenya’s gaming space, rendering it ‘unstable’ in comparison to the markets of other countries.

He added: “I think to be honest yes, you have to say it’s unstable because you just just look at the last couple years, at what’s happening – changes to taxation, bringing in various taxes, arguing with the telcos and freezing mobile payments and pesa and all these operators having their licences revoked – I think you have to say that its unstable.”

Imran Bukhari, CEO of TrueWave, remarked that regulatory changes could pose an obstacle to operators interested in the market, but countered that Kenya’s appeal was in its ‘established customer base’, who are familiar with betting dynamics.

He stated: “Look at all the other countries. If you look at Kenya, most of the users are aware, and mobile money is a part of pretty much everyone’s life. So that journey for a user to do the operation online, everybody’s used to it, so your audience is there and they are used to it.

“The only issue I would say is right now, yes, of course, regulatory requirements are changing. And that just throws a little bit of caution. Essentially, my observation would be that the companies who are nimble in terms of moving quickly, having the products which are right fit for the market and have the ability to switch between – an ability to have maybe more than one – territoires where they operate, are the ones who can negate the pressure.

He continued: “I think businesses should be built around getting more volumes, getting more people to stick – turnover of customers will be higher, you will make money and your product will be successful.”

Despite facing regulatory headwinds, John Gordon, CEO of Incentive Games, reiterated the importance of a product-focused approach, commenting: “I completely stand by what Imran was saying in regard to what BetLion focused on – product localization, fitting it to the market.

“It’s certainly recognised throughout the continent as how to do things well, and I think that all comes from their focus on the content and products and looking after the end user.”

Gordon spoke on the need to balance the provision of a positive customer experience and betting product with revenue generation and taxation.

“Let’s think about what we’re trying to achieve here,” he began. “Keeping the user on here for longer, and we shouldn’t call them users, we should be calling them players. We’re here to give entertainment, we’re here to provide a source of entertainment for certain people, in our view.

“If we all – taxation, software suppliers and the operators – increase our margins too much then the player loses all their money too quickly, they have a terrible experience, they’ve lost more money than they can afford – and they will not be telling their friends and they will not have a good experience.

“Now, if we all come together and say look, we’ll decrease our margin, we don’t need to increase the tax we can, we will get players playing for longer, enjoying themselves for longer, in a more sustainable manner. Everyone will get a better experience and there will be more revenue.”

Returning to the topic of market instability, Spencer Okach, Regional Managing Director at BetLion, remarked that although the Kenyan regulatory landscape does have its hurdles, it is still one of the most stable sectors within Africa.

“What makes people view Kenya as an unstable country< i have found for me is the fact that our Finance Bill changes every year, so it makes it very hard for people to plan,” he remarked.

“Right now the finance bill is being discussed, you don’t know what is coming that much, but if you compare it to other jurisdictions that I’ve seen, I don’t think there’s any outside south Africa that comes close to Kenya in terms of stability.

“What I can say that scares me about Kenya is consumer preferences, because they keep on changing – you don’t know what the customer would like tomorrow. I can give you a perfect example that I don’t think retail will ever come back to the levels that it was in Kenya. You just don’t know what they want that will take them into a retail store.”

Source: sbcnews.co.uk