iGaming Business magazine iGB 112 Sept/Oct 2018 | Page 68

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? 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.
In the North African countries there is a stigma about gaming,
which makes it diffi cult 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. What about lotteries, is there scope for expansion of
this vertical?
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 fi rst thing to look at is sports betting because the
growth of sports is huge. So they could look at fi nding 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 affi liate
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 defi nitely look at that because there are not a lot of
companies that really do that in the market. You would not fi nd M&A
there but you would fi nd 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 affl uent,
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 fi ve 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 fi rst 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
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iGamingBusiness | Issue 112 | September/October 2018
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 fi rst 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 fi nd 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 fl exible
and in a new market like this, one of the key things that drives
growth is fl exibility. You fi nd 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.