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 last year’s inaugural ICE Africa demonstrated the 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 that make 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 grown to an estimated worth of $1.98bn in the last five years, with the industry there now employing 5,000 people. Reports of money laundering activity, advertising targeted at children and problem gambling, particularly among unemployed young people, led to the government imposing strict rules for gaming companies and issuing tough sanctions that involved a telecoms shutdown.
Elsewhere, Uganda suspended the issuing of all gaming licences in an effort to address the growing rate of problem gambling and Ghana is looking to address the same issues by undertaking a comprehensive review of its current Gaming Act.
NUMBERS GAME 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, so to will the number of people wagering, providing operators with an ever-expanding market of willing participants.
THE OPPORTUNITY REMAINS
If caution is exercised, however, there still remains vast opportunity within African countries, providing gaming operators 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.
The population of Africa stands at 1.3 billion, making it one of the largest untapped igaming markets in the world (by way of comparison, the USA has a population of 327 million). Africa also has a young population – 68% are aged 27 or under – 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 finetuning 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.
POWER TO MPESA 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.
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 doesn’t hold a bank account.
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 straightforward 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.
HOW TO ENTER THE MARKET
It is imperative to assess the local legal and licensing requirements in each country. The key takeaway from ICE Africa last year was 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.
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.
SUSAN O’LEARY is the CEO of Alderney eGambling, the Alderney regulator’s strategic and development body. As a lawyer, she represented some of the world’s leading eGambling operators and gambling service providers including many of Alderney’s licensees; as such has perspective on both the commercial and regulatory elements. Susan has a clear understanding of the online landscape and is a regular speaker at key industry conferences and events globally.