There is a new industry in Nigeria: Distributed Sports Betting (DSB). It is very unfortunate that this particular industry exists. During my last few trips to Nigeria, I have watched how young people are betting real money on sports especially football. The business is still informal with deep concentration in mainly market areas.
But unlike another informal sector (the Nollywood) which has since gone mainstream, this one is not a product of strength and innovation. When Chris Obi Rapu, Okechukwu Ogunjiofor, Kenneth Okonkwo and Nnenna Nwabueze invented the Nigerian Nollywood through Living in Bondage, they made a path to artistic freedom for many Nigerians. Starting with Kanayo Kanayo through Circle of Doom to thousands of movies unveiled yearly, we have seen massive scaling of that vision where Andy used Merit for ritual and Kanayo reminded us that “Jesus is a Christian”. Though the industry has a long way ahead, we are confident that Nollywood has been a great force, for good, across Nigerian families. Remove our Churches, Mosques and Nollywood, the hardship in the land would have killed more people. Nollywood makes us forget the frustrations in the land, for a while.
[Of course, there is a debate on how Nollywood came. My point is largely that Living in Bondage redesigned the movie acting “experience”, creating celebs from actors and actresses. With that, it became something people saw as a career to be proud of. Living in Bondage was not the first home movie, but in my opinion, it was very instrumental in luring talent into the sector and normalizing the perception of Nigerians in the sector.]
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This sports betting is a product of huge youth unemployment and frustration, pushing young people to think that wagering N2000 could make them instant millionaires. That will not happen, but that does not mean that government should outlaw it.
In this trip, I have come to consider DSB as a full-brown industry which government must take a hard look at. It is operating at the periphery and no one really cares. That is in our DNA, no one ever cares in Nigeria. But it is a mistake to think that Nigeria has not built another (informal) sector. Yes, that is not what many of us would wish. But that outcome does not diminish the fact that we have a new sector – Distributed Sports Betting – in our hand.
In my model, I estimate it to be about a N180 billion sector (~ $500 million). It is seasonal since it tracks the European football season. Government should quickly regulate it and make sure the players are paying not just VAT but gambling tax. For state governments looking for internally generated revenue, DSB is a growth sector and they should work to incubate it, making sure that Nairabet, Bet9ja, Naijabet, Megabet, Merrybet, BetOlimp, Bet365, Betway and others are paying VAT and taxes.
There are many elements in regulation. They could include stipulating legal age for betters, restrictive advert zones [not close to primary schools], etc.
What drives DSB is the same thing that is driving digital business: near-zero marginal cost which anchors huge scalable advantage. With that low marginal cost made possible by Internet, this sector would continue to grow. In short, the unbounded and unconstrained distribution nature of the web is the very reason why government should invest resources now to track the sector. Doing this is really simple: let all the betting platforms register with the National Lottery Regulatory Commission with all linked to the Federal Inland Revenue Service (FIRS) for tax purposes.
Nigerians would continue to create. We have a new one – DSB – and government must normalize it as quickly as possible. This is different from the old “pool” which your uncle played. That was one was bounded by paperwork and transistor radio for the weekly magic winning numbers. Today, the web has redesigned that business and the global headquarters of sports betting – England – has made it cool. Yes, betting firms in England adorn the jerseys of sports heroes. Nigerian young people are hooked. You may not easily cure them, unless you give them jobs, but you can ensure the platforms pay taxes possibly to help them indirectly.
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“DSB” as you put it is really a new industry and it will continue to grow. The first time I took a closer look at this industry from a new-market angle, I discovered how big it was. The low marginal-cost advantage will keep propelling its widespread growth. As it gets deeper and the market gets more competitive, innovation would eventually be critical. At that point, I think differentiation would begin to matter. From a tax-collector angle, I really don’t know what the New Growth section in tax houses really do. Regulation is vital.
Lagos leads in this sector across all factors. Yet, Lagos is not the same as Nigeria. The key thing is to have a national regulation. Lagos has provided some elements to make this happen. It is also time for NGOs to have sessions to educate youth people on this destructive lifestyle