Sport Betting Craze Part 2: The big numbers
The second part of the Sports Betting Craze series prepared by award winning journalist, Waihiga Mwaura seeks to crunch the numbers involved that has made a number of international betting companies make a beeline for Kenya.
In 2014 the betting industry in the country was estimated to generate Ksh1.8b (USD 17,692,591.23) annually with a projected growth that will see it top Ksh7.5b (USD73, 719,130.11) by 2018.
The projected exponential growth has attracted big players to the industries with sports betting at the crux of the rush by international firms to invest in what is a sure profit minting venture.
Most sport betting companies claim that you only need Ksh100 (USD.98) to place a wager that could eventually net you 1000 times the figure in winnings.
On any weekday, one can quickly notice idle youth walking up and down the narrow streets of Kayole in Nairobi’s Eastland’s area.
They are easily drawn to betting parlors where they hope to double or triple their money on manual slot machine.
Football is still the theme here in this game of chance where should the slot machine tally with your choice, then the welcoming sound of coins pouring out is music to their ears.
“This is a good game because you only need Ksh10 to play and look at me now I have money for lunch and a few other things. I am very happy. It is better than stealing or drinking and at least here police do not disturb us. I lost Ksh300kshs since morning but now I have made it all back,” Boniface Wandera a gambler said.
Their biggest complaint is not the loss of money from these slot machines but rather police harassment after a big win.
“Police need to stop bothering us. We are indulging in a legal game not an illegal one,” Wandera lamented.
The proprietor, Martin Karanja runs this shop in partnership with some Chinese investors who provided him with the slot machines and licenses.
“I stayed for a long time without work. I took this thing as an opportunity. Went and took money from the Uwezo Fund and put it in this,” the owner reveals.
Karanja says that only adults are allowed to play his slot machines and he estimates that over 100 people visit his store daily.
But not everyone is happy with the proliferation of slot machines in the neighborhood.
“I am not happy with these slot machines at all. A Chinese brought one here. I used it yesterday and now I have only Ksh2000 (USD19.66) left. I do not know what to do and I don’t have work. We can’t leave it so they should be taken away because they are really messing us up,” Martin Mbithi, a boda boda (motorcycle taxi) operator cried.
Sport betting is not a new phenomenon in Kenya bearing in mind horse racing lovers have been placing bets on their favorite animals since the colonial days.
It remained a minority activity until now, so much so, that the Government has never seen it fit to fully upgrade the legal framework since 1966.
Currently PriceWaterHouseCoopers estimates that the Kenyan gaming industry generated more than Ksh1.98 billion in revenue in 2014.
By 2018 the report authors, total gaming in Kenya, Nigeria and South Africa will be worth Ksh37 billion thus if Kenya only takes 20 percent of that, the local industry may be worth at least Ksh7.4b.
SportPesa was among the first to introduce online mobile betting and now it has over two million subscribers who in a good month can generate for them Ksh2b (USD 19,658,434.70) in revenue.
Their investment in the sport betting industry is unprecedented, as they have sponsored the SportsPesa Premier League, Super 8-league, Gor Mahia, AFC leopards and Boxing Association of Kenya activities to the tune of almost Ksh450m (USD4,423,147.81) per year.
This huge outlay has raised questions on how much they are earning to offset such a huge outlay.
Its not just betting companies that are joining the gravy train. Leading integrated communication services provider, Safaricom is the mobile phone platform through which most bets take place.
Our attempts to contact their mobile money, M-Pesa department for accurate figures on what they make off betting yielded little but SportPesa claims it may have overtaken electricity firm, Kenya Power as the biggest consumers of the M-Pesa platform.
“We are here to stay and here to prove that we care about the Kenyan people and the Kenyan market. I’m sure we are their biggest customer in terms of pay-bill services and I am sure we are their biggest. At some point it was Kenya Power but we have now overtaken them. Many small transactions make us this way,” SportPesa CEO, Ronald Karauri, said.
“Safaricom have provided us with a solution. A wallet but remembers it isn’t a free one. They have invested in that. We are simply riding on that infrastructure as it is,” his mCheza counterpart, Peter Karimi.
Safaricom’s largest domestic competitors, Airtel is also looking for a piece of the pie and has waived transaction fees for their subscribers who want to venture into sport betting.
The aging cybercafés have also received a new lease of life as young people flocked back to them to place bets.
Walk into a cyber café in Eldoret town and you will probably find young people hunched over computers studying upcoming fixtures, odds and placing bets.
Kenya has also become the launching pad through which several companies penetrate East Africa.
These operators are keen to differentiate themselves from casinos and to some extent they are justified and the fact that match results are outside direct influence of local betting operators means that sometimes, contrary to the gambling adage, the house sometimes loses.
Nevertheless the sport betting companies operating in Kenya seem to be doing quite well which indicates that that they have figured out how to mitigate their losses and make money off small bets.
Allan Jagwe, Betting Software Programmer says; “The jackpot is where betting companies make their money. You will rarely get all 10 or 13 bets correct thus the gap there allows them to collect funds.”
Betting companies are managed via betting software that are connected to betting houses overseas and provide real time odds and description of matches among other things.
The makers of this software’s study team trends and translate them into odds. These trends involve different factors including a clubs ability to spend money on top players and what position the club usually finishes the season.
In addition the software also has a payment component where they withhold your funds if your team lost or pay out if your team wins.
One would wonder, what would happen on a bad weekend if everyone won and the house didn’t have enough money?
“There there has to be strong legislation to ensure that sports betting companies do not become bankrupt,” Jagwe explains .
On the third and final part of betting craze as we look at regulation and addiction when it comes to sports betting.
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