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Gambling businesses looking to enter African markets must be prepared for regulatory and tax volatility, understand the data about local markets and be patient, according to a panel with an array of experience on the continent.
Speaking on building a successful market entry strategy for Africa during SBC's Barcelona Summit, Sab Jhooti, the CEO of Bonmoja, added having good local partners to the list.
Jhooti explained how acquiring or partnering with local companies that are already licensed can save precious months when it comes to entering a market such as Kenya, where his company is active.
Additionally, leveraging a partner's localised business know-how and trust with consumers can give a new market entrant a boost, according to the panel, which was moderated by Simon Burrell, the general manager for Africa at LiveScore Group.
Retief Uys, the chief yield officer at Sportingbet South Africa, sees Nigeria as a “massive opportunity” due to its population size and love of sports, but stressed knowing the data on local consumers being targeted is always key in any African market.
Having analysed player data for existing Sportingbet customers in South Africa compared to Ghana, Uys pointed out there are “clear differences”.
“In Ghana, you must be clear what type of player you are targeting, as the quality of the acquisition determines the retention rate and lifetime values,” Uys said.
When it comes to acquiring and retaining players, the African markets can also be quite unique, with sign-up bonuses and good odds seen by the panel as key ways to get more customers.
However, they also believe volatility is a major risk across the continent.
“On any given morning we could wake up and lose our licence from either a change in regulation or government. It's important for us to get into at least ten countries as soon as possible to spread this risk,” he said.
Recently in Kenya, interior secretary Fred Matiangi’s demanded the regulator investigate if operators had received all their required clearances. This led to many of the 2022/2023 operating licence renewal applications not being approved by their deadline and a number of new applications being rejected.
The issue has since been cleared up, according to the Kenyan authorities.
Uncertainty is also driven by frequent tax changes which “seem to come every year”, according to Marc Saba, co-founder of lottery operator Moja Group.
Following the impact of COVID-19 on public funds, many African countries attempted to increase revenues from gambling taxes and introduce monitoring systems to help stop tax leaks; however, some nations such as Malawi have reduced taxes to encourage economic activity.
“It can be a challenge for forecasting. However, taxation doesn't work in most countries," according to Saba.
"You either pay up and try and influence the regulator to understand it is not working [or] other operators decide to not pay, it's how you perceive your business. It can be a complicated business in some countries,” Saba said.
Regulatory uncertainty can also persist in some markets. There is a long-running dispute over the powers held by local and federal regulators in Nigeria, which has been addressed in a recent court case, while in South Africa the second-largest political party wants lawmakers to address “gaps” in legislation.
Another hurdle for businesses noted by the panel is the high cost and slow speed of moving money out of any African-based bank account to another country.
“Mobile betting is very important across the continent. But using various currencies and payment methods on the continent is still very tricky. People have to look for different ways to transact. Retail still cash is king,” Saba said.
Albert Climent, head of Africa at the Yolo Group, which operates crypto-only sportsbet.io and Bitcasino, which do not have local African licences, suggested cryptocurrency could be a solution to operators' troubles, but regulators “are not willing to have a conversation about them”, according to him.
