BETTING THE HOUSE: Africa embraces gambling.

Author:Thomas, David

Gambling is booming in Africa, driven by the growth of online betting. What are the opportunities for investors and what are the challenges for regulators?

On a late September afternoon in the north of England, two football teams known neither for exquisite play nor world-beating stars eked out a hard-fought stalemate under the autumn floodlights.

For generations, locals have watched Hull City play Middlesbrough to little fanfare, an afternoon at the football promising a weekly diversion from life in these tough industrial towns. September's game was indistinguishable from thousands of prior contests, delivering a goal apiece, five bookings, and limited entertainment. In years past, the result would have reached no further than the back pages of the newspapers.

Yet in 2018, over 4,000 miles away in Kenya, thousands of viewers paid close attention to this second tier contest. Staring into their smartphones or craning their necks to watch the game amid the bustle of a betting shop or internet cafe, they hoped and prayed ufor a goal, a moment of brilliance, that would make or break the weekend.

Why is so much interest placed in the clashes of mid-level English football clubs? A clue lies in the brand emblazoned on Hull City's shirts. SportPesa, a Kenya-based sports betting operator that also sponsors Everton FC, is one of the most successful players in Africa's booming sports betting market. This young, brash, multi-million dollar sector is mushrooming in size and capturing African imaginations and wallets.

From unemployed grifters in Dar es Salaam to office workers in Lagos, sports betting offers punters a shot at instant wealth by piggybacking off the continent's obsession with football. But it's not only football betting that is booming in Africa. Casinos, lotteries, and internet gaming are taking off as economies grow and the emerging middle class look for entertainment. Increasing internet penetration and the popularity of smartphones and online payment systems offer an unparalleled opportunity for firms to reach middle-class consumers far from the smoke-ridden dens of the past.

A 2017 survey from GeoPoll found that 54% of young people in six sub-Saharan African countries (Nigeria, South Africa, Ghana, Tanzania, Uganda and Kenya) have tried gambling. Kenya has the highest number of youths who have participated in gambling or betting at 76%, followed by Uganda at 57%. The Kenyans surveyed bet on average once a week, mostly on football, spending around $50 per month.

"The general proposition is that Africa has a fairly young population. We're seeing tremendous growth in certain territories ... more people are getting connected online and mobile banking apps are very prolific. Payment systems, particularly in Nigeria and Kenya, are very well developed," says Garron Whitesman, a gambling sector lawyer at Cape Town-based Whitesmans Attorneys.

"I absolutely think it's poised for growth and will continue to grow--one really only has to look at the interest that operators are expressing, the efforts that operators are making."

While gambling firms and local governments salivate over the prospect of new revenue streams, the rise of gaming offers unique challenges. Many governments struggle to police a notoriously complex sector that confounds even developed markets. Emerging technologies offer unscrupulous operators a...

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