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By Alexis Akwagyiram and Didi Akinyelure
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LAGOS, June 25 (Reuters) - Online sports betting is expanding in soccer-mad Nigeria largely thanks to payment systems established by homegrown innovation companies that are starting to make online services more practical.
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For several years, mobile payments failed to remove in Nigeria as they have in nations such as Kenya, where Safaricom's M-Pesa cash transfers have actually fostered a culture of cashless payments.

Fear of electronic scams and sluggish internet speeds have held Nigerian online customers back however sports betting companies states the new, fast digital payment systems underpinning their sites are altering mindsets towards online deals.

"We have actually seen significant growth in the number of payment services that are available. All that is definitely changing the gaming area," said Seun Anibaba, CEO of Lagos State Lotteries Board, gaming regulator in Nigeria's business capital.

"The operators will opt for whoever is quicker, whoever can connect to their platform with less concerns and glitches," he stated, adding that taxes from sports betting in Lagos State increased 30 percent to 40 percent in 2017 from 2016.

That growth has been matched by a rise in web payments, according to information from the Nigeria Inter-Bank Settlement System (NIBSS), which is owned by the reserve bank and certified banks.

In 2016, there were 14 million web payments worth a total 132 billion naira ($420 million). Transactions jumped to 29 million worth 185 billion in 2017 and in the very first quarter of 2018 there were almost 10 million worth 61 billion.

With a young population of nearly 190 million, increasing cellphone use and falling information expenses, Nigeria has long been viewed as a great chance for online companies - once customers feel comfortable with electronic payments.

Online sports betting firms state that is happening, though reaching the 10s of millions of Nigerians without access to banking services remains a challenge for pure online sellers.

British online sports betting company Betway opened its very first African organization in Kenya in 2015, followed by Uganda, Ghana and South Africa. It launched in Nigeria in January.

"There is a progressive shift to online now, that is where the industry is going," Betway's Nigeria supervisor Lere Awokoya stated.

"The growth in the number of fintechs, and the government as an enabler, has helped business to prosper. These technological shifts encouraged Betway to start operating in Nigeria," he stated.

FINTECH COMPETITION

sports betting firms cashing in on the soccer frenzy whipped up by Nigeria's involvement in the World Cup state they are finding the payment systems created by regional startups such as Paystack are showing popular online.

Paystack and another local start-up Flutterwave, both founded in 2016, are providing competition for Nigeria's Interswitch which was set up in 2002 and was the primary platform used by organizations running in Nigeria.

"We included Paystack as one of our payment alternatives with no excitement, without revealing to our consumers, and within a month it soared to the primary most used payment option on the site," stated Akin Alabi, creator of NairabBET.

He said NairaBET, the nation's 2nd greatest wagering firm, now had 2 million regular consumers on its website, up from 500,000 in 2013, and Paystack stayed the most popular payment option given that it was included in late 2017.

Paystack was established by 2 Nigerian computer technology graduates, Shola Akinlade and Ezra Olubi, who got early stage funding in Silicon Valley's Y-Combinator programme.

In December 2016, it raised $1.3 million from financiers including China's Tencent and Comcast Ventures in the United States.

Paystack, based in the frenetic Ikeja district of Lagos, stated the number of it processed rose from about 8,000 in early 2016 to more than 900,000 since June 2018.

"In early 2016 we were processing about $3,000 a month. Today we process well over $11 million each and every single month," stated Emmanuel Quartey, Paystack's head of development.

He said an environment of developers had actually emerged around Paystack, producing software application to integrate the platform into sites. "We have seen a development because community and they have actually brought us along," stated Quartey.

Paystack stated it makes it possible for payments for a number of wagering companies however likewise a wide variety of organizations, from utility services to carry business to insurance company Axa Mansard.

Flutterwave, co-founded by Nigerian business owner Iyinoluwa Aboyeji, is likewise backed by the Y-Combinator programme as well as investor Greycroft Partners and Green Visor Capital and the Omidyar Network. It raised $10 million last year.

FOREIGN INVESTMENT

Shifts in Nigeria's payment culture have corresponded with the arrival of foreign financiers hoping to take advantage of sports betting.

Industry professionals say the sector produces about $1 billion a year and is likely to grow faster than in South Africa and Kenya where business is more established.

Russia's 1XBet and Slovakia's DOXXbet have actually both established in Nigeria in the last 2 years while Italy's Goldbet led the pattern, taking a 50 percent stake in market leader Bet9ja when the Nigerian company released in 2015.

NairaBET's Alabi stated its sales were divided in between shops and online but the ease of electronic payments, cost of running stores and ability for clients to avoid the preconception of gambling in public meant online transactions would grow.

But regardless of advances in digital payments, Kunle Soname - chairman and co-founder of Bet9ja - said it was necessary to have a store network, not least because many clients still remain reluctant to invest online.

He said the business, with about 60 percent of Nigeria's sports betting market, had a comprehensive network. Nigerian sports betting stores frequently serve as social hubs where consumers can see soccer free of charge while positioning bets.

At a BetKing hall deep inside the bustling Oshodi market in Lagos, lots of soccer fans collected to enjoy Nigeria's final heat up video game before the World Cup.
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Richard Onuka, a factory worker who earns 25,000 naira a month, was focused on a television screen inside. He stated he began gambling three months ago and bets as much as 1,000 naira a day.

"Since I have been playing I have actually not won anything however I believe that one day I will win," stated Onuka. ($1 = 314.5000 naira) (Reporting by Alexis Akwagyiram and Didi Akinyelure in Lagos