Africa Focus
Africa Focus
We only hear about sub-Saharan countries when it comes to igaming in Africa . Are there investment opportunities in the rest of the continent worth pursuing or do the associated risks rule these out ? In the North African countries there is a stigma about gaming , which makes it difficult for a lot of gaming companies to want to go there . I think Tunisia is one of the countries that is really trying to think about how it can legalise and make more opportunities for gaming companies . In the other countries there is a lot more risk around just being there .
Which types of companies ( operators , suppliers , payments , affi liates ) should potential investors be looking at when it comes to establishing a sustainable entry and foothold in the region ? I think the first thing to look at is sports betting because the growth of sports is huge . So they could look at finding small sports betting companies in the new markets that still have space for growth and doing M & A with those . I think there are also opportunities with some payment providers that are looking to diversify because they see gaming as a big opportunity . The affiliate market in Africa is still very young but I think there are opportunities to come to market with various media providers . Apart from South Africa , there are very few suppliers in the African market .
Online casino is an area that companies should start looking at because I expect it to follow the same trend as online sports betting . Companies that only do casino I think are going to be the new trend in the market , which is going to be the new growth area . If I was an investor I would definitely look at that because there are not a lot of companies that really do that in the market . You would not find M & A there but you would find a market that would slowly adopt what you are doing and you could grow very fast .
Sport had a natural in as it is very popular in Africa . But there aren ’ t as many land-based casinos in Africa as there are in other regions . Is that going to be a stumbling block ? Casinos in Africa have traditionally been built for the affluent , which is why a lot of local people would never walk into a casino , whereas sports just lends itself to every possible person . But we are seeing trends where Chinese businesses in some countries in Africa are bringing local handmade slot machine products into local communities and many people are playing these things . They are demystifying the idea that you have to be a certain type of person to play casino .
Four or five years ago nobody really thought African countries would be able to become what they have today in terms of sports betting markets . When sports betting first started you only had one or two and if you ’ d introduced live betting four years ago you ’ d have just been looking at disaster . You had to bring players through a basic education process . It ’ s the same with casino . So you need to start with a basic online slot – you don ’ t have to hit them with all
your products , you just need a very simple product that brings a game at the base level , the same way sports has done . After that people will naturally want more .
What about lotteries , is there scope for expansion of this vertical ? Once most countries really get behind their lottery proposition there is a huge opportunity . It is still a massively untapped market in a number of countries . With traditional lotteries in Europe , you go to a shop and you buy a lottery ticket – that is second nature , that is the way the infrastructure has been set up . It is not this way in Africa because the infrastructure that has been set up is different . One of the reasons why lotteries haven ’ t been very successful yet is because people don ’ t trust them , whereas with sports they know that when Man Utd play Arsenal the operator can ’ t control what is going to happen . Basically , they have got visibility . People don ’ t really buy into rollovers . You ’ ve seen companies that have come into the market with big jackpots and people don ’ t believe in that . They think , ‘ When somebody wins I am sure it is your brother .’ More needs to be done in terms of building trust .
“ One of the reasons why lotteries haven ’ t been very successful yet is because people don ’ t trust them , whereas with sports they know that when Man Utd play Arsenal the operator can ’ t control what is going to happen ”
Is there anything investors should be wary of when presented with potential opportunities in African countries ? The first thing they need to do is look at the market and look at the real value of the opportunity they ’ ve been presented with because even a lot of South African companies still don ’ t understand how to evaluate the real value of something . You need clear due diligence and what I mean by that is not just getting KPMG to look at it , but getting people who understand the local market , who understand what the value of a player on a platform is and things like that . What you do find in the sports betting market is that a lot of these African companies , the biggest problem they have is product and investment . They don ’ t control their products so it is hard for them to be nimble and flexible and in a new market like this , one of the key things that drives growth is flexibility . You find the companies that are really successful in this market are the ones that have a lot of funding and either control their product or have their software provider as a co-owner in their business .
64 iGamingBusiness | Issue 112 | September / October 2018