Susan O’Leary, CEO of Alderney eGambling, assesses the progress being made by legislators across the continent.
As interest in the African online gaming industry continues to gather momentum, and some of the world’s leading operators enter the market, it is important to ask if the current regulation can keep up with the pace?
It’s no secret that Africa has the potential to be one of the largest legal online gambling markets in the world. The success of the inaugural ICE Africa in 2018 demonstrated the sheer appetite and enthusiasm of governments, law makers and operators to see it compete on a global scale. Delegates were keen to learn from the experience of more established jurisdictions to be able to carve out their own success stories and knowledge was shared as to the best ways to enter the market and collaborate with local partners.
At that point in time, the majority of countries were moving towards industry regulation with commitment and determination. However, not only are the 54 countries making up the continent so vastly different in their approach to online gaming regulation, but even the most progressive of these countries have experienced setbacks and delays in the past 12 months.
While most countries are striving to develop legislative frameworks to regulate the market, things are not moving quickly, in marked contrast to the growth of the industry itself. Many countries are also struggling to deal with the rising negative social impact of a largely unregulated industry.
Kenya’s recent crackdown has even sought to curb its exponential growth which has rocketed to an estimated worth of $1.98billion in the last five years, with the industry there and now employing 5000 people. Reports of money laundering activity, advertising targeted at children and problem gambling, particularly amongst unemployed young people, led to the government imposing strict rules for gaming companies and issuing tough sanctions that involved a telecoms shutdown.
Kenya’s latest stance appears, more than ever, to be targeted at restricting investment in the industry with a proposed hike in licence fees and requirements for foreign operators to establish a physical presence and base servers in the country. Whether this effort will curtail the issues the country is facing or simply force the industry underground, leading to less protection for the vulnerable remains to be seen.
Elsewhere, Uganda suspended the issuing of all gaming licences in an effort to address the growing rate of problem gambling among the young and Ghana is looking to address the same issues by undertaking a comprehensive review of its current Gaming Act.
The opportunity remains
If caution is exercised, however, there still remains vast opportunity within African countries for online gaming operators, providing they seek to enter them in the right way. The continent is unique in that it has a young population with an appetite for gambling, high levels of smartphone penetration and a financial system and economy that is mobile driven. It can be navigated, so long as operators and suppliers are aware of the challenges and seek the right support and guidance to make it through to the other side.
The population of Africa stands at 1.3 billion making it one of the largest untapped iGaming markets in the world. In comparison, the USA has a population of 325 million. It also has a young population – with an average of 68% of the population below the age of 27 – that has embraced mobile technology. Smartphone penetration is around 44% in general but as high as 90% in places like Kenya.
In short, the continent has jumped the desktop stage and gone straight to mobile. Operators and suppliers in mature markets such as Europe have spent the past few years fine-tuning their mobile propositions and products as players continue to migrate from desktop to smartphones and tablets. They are now in a position to offer players in Africa a world-class mobile gambling experience.
What’s more, there is an appetite for gambling in countries across the region. According to a 2017 GeoPoll survey, 76% of people aged between 17-35 in Kenya had gambled – in Uganda, that number is 57% and in Ghana it is 42%. As populations continue to rise, the number of people wagering will grow in line with it, providing operators with an ever-expanding market of willing participants.
Of course, in order to leverage these opportunities a number of hurdles need to be cleared. Some of these apply to all pre-regulated markets, and some are specific to Africa. This is true when it comes to banking – a high percentage of the population banks via mobile and without holding a bank account. MPESA is one of the leading mobile money transfer providers, and accounts for more than 50% of all transactions in Kenya where more than 16 million transactions occur daily on the platform.
Online operators already live in the region have had to adapt their payment wallets to meet these needs with brands offering mobile, USSD and online payments to their customers. Bitcoin and other cryptocurrencies are also becoming increasingly popular in African markets, particularly when it comes to online gambling.
Operators and suppliers also need to consider their own banking options, particularly when it comes to repatriating funds. As part of daily business, they need to move funds from one account in one country to another account in another country on a regular basis. This is usually a straight-forward process, but some financial institutions have different processes and impose certain limits.
Operators also need to obtain a clear view of player preferences in the country they are looking to enter. Sports betting is the most popular gambling activity across Africa, but pool betting jackpots and virtual sports have a strong fanbase too. Player preferences differ from market to market.
Another consideration is connectivity. While smartphone adoption has seen rapid growth in recent years, Africa still has the world’s most expensive pre-paid mobile data plans in relation to income, preventing users from remaining constantly online.
How to enter the market
It is imperative to assess the local legal and licensing requirements in each relevant country. The key takeaway from ICE Africa last year was the message that working with local partners will help to navigate market-specific hurdles and obstacles.
It is also helpful to obtain a licence from a trusted, established regulatory body such as the Alderney Gambling Control Commission (AGCC) to demonstrate an adherence to global best practice and international standards. Even in jurisdictions where there is no requirement to be licensed, operators take a risk by operating without being properly regulated, especially if they hold other licences from regulated markets. A global licence from Alderney shows that all activity is approved and supervised and the business is conforming to international best practice.
The AGCC has spent a long time forging relationships and partnerships with key representatives from African governments, regulatory bodies, banks as well as local operators and suppliers. We understand the market and the direction it is travelling in. This insight means we can guide licensees through the process while ensuring they are meeting internationally recognised standards as they prepare for launch.
Africa is moving towards widespread regulation and knowledge will undoubtedly be power. Only those who are well prepared when they enter the market will be able to capitalise on the opportunity in the long-run.
This article first appeared in iGaming Business Africa Focus, September 2019.