Leading gaming markets in Africa

Gambling in Sub-Saharan Africa is a market worth billions of dollars, in this article John Bamidele delves deeper into leading gaming markets in Africa

Africa’s gambling industry is one with large profit margins both offline and online. Analysts say the rapidity of development witnessed in the past five years was due to growth witnessed in the internet, smartphones, and payment systems. Gambling is a transverse passion involving mostly young people, but males and females who are elderly are not left out too. In a continent that is ravaged by poverty and needs, gambling gives hope to the hopeless, provides jobs for millions, and most importantly foreign direct investments for a continent in dire need of one.

The region has today attracted the attention of analysts and sociologists where people not only play for fun but also live by it. In Nigeria for instance, betting shops can be found in all knocks and cranny of major cities in Western Nigeria, even in the remotest villages, we find small shacks made of wood or iron sheets equipped for lottery betting. The World Bank reports that Africa has the highest number of poor people, in fact, the continent is regarded as the poverty capital of the world. In view of this, a few cents may gain a hundred times the amount and who could resist trying his/her luck? Here, the huge casinos, platforms, and gambling applications guarantee billions to government coffers in the form of taxes.

Gambling regulation in Africa

In the continent, gambling is forbidden and pushed to the penal code in seven African countries namely Libya, Mauritania, Sudan, Guinea-Bissau, Burundi, Somalia, and Eritrea. Eight other countries in the region also place limitations by means of partial gambling and the countries are Algeria, Senegal, Egypt, Togo, Tunisia, Nigeria, South Africa, and The Central African Republic. Religion and morality play the biggest role in either making gambling partially illegal or illegal in these jurisdictions. Regulation is key but weak gambling regulation in Africa has robbed and keeps robbing the continent of billions of dollars. European gaming brands view the continent as a cash cow because they make a lot of money here, repatriate the money without paying the right taxes to the government and also contribute less to the issue of responsible or safe gambling in Africa. Here anything goes.

Leading gambling markets in Africa

South Africa, Kenya, Nigeria, Uganda, and Ghana have the biggest gambling markets in Africa and it’s worth $47 billion dollars. These countries have the highest percentage of gamblers and the highest expenditure; however, Morocco, Mali, Senegal, and DR Congo are emerging despite these four countries being predominantly Moslem. Eastern African countries are clear leaders when it comes to online gambling. In Africa, Kenya was the first country to regulate online gaming and we have seen other east African countries like Tanzania and Uganda also regulating online gambling.

South Africa

It’s unarguable and undisputable that South Africa has the biggest gambling market in the continent, with some predictions estimating its gross gaming revenue to pass the $5 billion mark by 2023. It controls 40% of the gambling market in Africa. Despite not having the population of Nigeria, South Africa no doubt has the biggest economy in Africa. The high GDP per capital is reflected in the purchasing power significantly greater than that of most the other countries in Africa which provides a solid customer base for investors. Though the pandemic caused the contraction experienced in the country’s GGR in 2020 and early 2021, it is expected to bounce back later this year thanks to the recovery of the sports betting segment. The adult South African population places sports bets on a regular basis, little wonder it accounts for 24% of the gambling industry revenues. Football, horse racing, cricket, rugby, and golf are the most betted-on sports.

The casino is the biggest gambling vertical in South Africa with 39 land-based casinos. Gambling Act was passed in 1996 and it created licensing procedures and taxation rates officially regulating the sector and offering legal protection to customers. To start operating a casino in South Africa, you have to acquire a local license, which would cost the investor $28,000 with $14,000 paid annually for elongation. This is cheap compared to Britain’s 350,000 pounds per license and 15% tax on all of the business’s income and Italy’s $350,000 for license and $80,000 for annual renewal. The taxation regime in South Africa varies from province to province with the aggregated numbers showing that casino and betting businesses give 10% and 8.5% of their income to the government.
Online gambling is not allowed in South Africa despite a 2016 amendment bill currently under review. As an investor wanting an offshore investment, South Africa is the place to be.

Nigeria

Nigeria should no doubt be the leader in gambling in Africa considering its youthful population and love for gambling. However, poor regulation and religious sentiments have not made the most populous black nation in the world realize its potentials. Pricewaterhouse report that about 60 million young players participate in gambling activity on a regular basis. Sports bet is the fastest-growing vertical in Nigeria but the lottery is arguably the biggest of them all. Nigerians no doubt love sport and their passion for the round leather game has made sports betting thrive in the country. Lottery on the other hand has gained more ground in the country than all others other gambling verticals. The reason is that about eight games are played every day with Ghana games accounting for more than half of the games, and the results are quickly released. Aside from that, the games are played at about two to three hours intervals which allow punters to stake whenever they chose to. The most important factor propelling lottery among the locals is that, with N5 which is not up to a cent, you can play games.

The reason why gambling in Nigeria has not been up to scratch is the fact that regulation is not only weak, it is also confusing. Nigeria operates a federal system of government in which we legislate on three lists, exclusive, concurrent, and residual. It’s only the federal government that legislates on matters on the exclusive list while the thirty states in Nigeria or the federating units and the federal can both legislate on the concurrent list while the federating units (36 states) are the only unit allowed to legislate on the residual list. Now, the constitution is silent on gambling and in that, gambling is not part of the items on the exclusive and concurrent list. The federating units where gambling is legal are constantly at loggerheads with the national gambling commission on who should regulate gambling. It should be noted that the Northern part of Nigeria which is predominantly occupied by Moslems does not allow gambling. With the federal gambling commission issuing licenses and the states also doing the same, investors are confused about which license to obtain. Nigeria urgently needs to put its house in order by having a unified gambling regulatory framework.

When it comes to online space, the law doesn’t mention gambling or betting sites in the objects of restrictions. However, in April this year, Lagos State, the commercial nerve center of Nigeria came out with a new gambling law and a new gaming board known as Lagos State Lotteries and Gambling Authority. The new gambling act made provision for the regulation of online gaming. With this new dawn, Lagos State has become the first jurisdiction in Nigeria to regulate online gaming. To operate gaming in Nigeria, you need to obtain a federal gambling license or state gambling license. If you obtain a federal license, you can only operate online betting while if you obtain your license from any of the states where gambling is legal, you operate both online and retail. In Nigeria, it’s important to know that roulette, dice, and other non-skilled games are considered illegal.

Kenya

The Eastern African country of Kenya has proved to be very fertile soil for gambling with an expenditure of at least $2 billion per year. Kenya is Africa’s biggest online gambling market according to Geopoll (a research company in the field of cell phones and information concerning emerging markets). It revealed that Kenya leads the field in betting on football matches with 70% of the populace involved. The main football competitions used for betting are the European Champions League, Europa League, and major football leagues in Europe like the English Premier League, Spanish, Bundesliga, French, and all major leagues in Europe. Geopoll also revealed that 54% of young Africans sought their fortune in gambling. The first on the list is Kenyas at 76%, followed by the Ugandans at 57% and Ghana at 42%. Kenya introduced a tax of 35% on tax on companies and a legal mandate to devote 25% of income from betting to social causes.

The Kenyan market closes the top three of the most developed African countries suitable for the gaming business. If deciding to enter the untapped gambling market of Kenya, one will have to obtain a license from the Betting Control and Licensing Board. Kenya boasts of 0ver 50 sport Book companies, 28 casinos, 11 bingo halls, and a horse race.

In conclusion, the three gambling markets are in excess of $40 billion as of 2018. Having experienced steady growth for the last quarter-century, only interrupted due to the effects of Covid-19, African economies as a whole are on the rise. With the rising disposable income of some sub-Saharan countries, increasing middle class combined with the rapid development of communication infrastructure in the region, Africa has become one of the most exciting markets for investments in the iGaming industry. Given the number of users covered by 3 G and 4G networks over the last five years and the increased penetration of smartphones, iGaming in Africa is set to experience exponential growth in the next five years.

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