How to start a sports betting business in Nigeria

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Not too long ago, I visited the university I graduated from. Apart from the few new buildings which had sprung up, I noticed the presence of betting shops everywhere. You see, while I was at University, not even one betting shop had existed on the site.

The betting industry is a multi-billion dollar industry. Betting has existed in different forms in Nigeria for as long as I can remember. However, sports betting went mainstream about five years ago and now, there are betting shops on virtually every popular street you visit.

Tales of mega million naira wins have further fuelled the betting frenzy, but here’s the secret to cashing in: regardless of whether the punter wins or loses, the betting shop always wins. This is one of the reasons why sports-betting business has become akin to a gold mine in Nigeria.

In this post, I would like to examine how to set up a sports betting shop. In writing this article, I spoke to a young friend (let’s call him Dan) who was a cashier at a Bet9ja shop before gaining admission to the University. He was happy enough to share some valuable information with me, so I will be referring to his suggestions as this piece goes on.

How do betting shops operate?
Betting shops are the interface between the sports and a punter. The punter bets on the said sport with hopes of correctly predicting the outcome. The betting house is then obliged to pay the punter a set amount should the predictions be accurate. The betting house earns its keep from the higher probability of the number of failed predictions within the set period.

Signing up under a betting company
To begin in the business, you will need to signup as a franchise with a betting company. This will allow you to use the company software, name, logo and reputation, which help in reducing your risks as a newcomer. In exchange for this, you pay a franchise fee. Below is a list of betting companies with whom you can sign up your venture online, in order to begin the process right away. Most companies will require that you fill out an online form beforehand.

Nairabet

Bet9ja

Merrybet

1960Bet

Surebet247

Lovingbet

NaijaBet

Supabets

Each betting company comes with its own unique guidelines, commission rates and so on.
What you will need to start

1. Shop
The location of your betting shop is one of the most important aspects of the business. If you get your location right, you are most assured of always having customers. High footfall is key, so prioritise your location strategy above all – such as saving on the rent (within reason, of course). Avoid shops such as those on the 4th floor of shopping complexes in quiet parts of town.
Some franchises even offer guidelines on how and where to secure your new venture. For example, Bet9ja will usually inspect your chosen location before you launch, therefore it might be a good idea to contact them for approval before relinquishing your rent.
Dan offered some insight into shop sizes and suggested that the shop should be at least 12m x 12m in size. Ideally, he said,  a standard bet shop should be able to contain 100 persons at any given time point.

Estimated rent: ₦15K monthly = ₦180K per annum

2. Computers + Internet
You will need Internet-enabled computers to place bets. The number of cashiers you have determines the number of computers you will need. You may start with two cashiers, but it is advisable to have up to four. Desktop computers are more advisable as they are less susceptible to theft. The computer specs can be as basic as 80gb HDD and 2gb Ram. A fairly-used desktop computer should go for about ₦70K.
Internet costs can potentially drive up running costs of your business if the wrong choice is made, so make a wise decision at this stage. You will need fast internet to run a betting shop, so some options to consider are any of the 4G-LTE internet service providers such as MTN, Etisalat, Spectranet, Smile. These cost estimates are based on the pricing for Spectranet indoor WiFi.
Estimated cost of four computers:  ₦280K
Internet (Spectranet): ₦40K

3. UPS
Depending on your pocket, you may consider getting a UPS. A 1.57kva UPS currently goes for about 34k.
UPS cost: ₦34K

4. Fittings
This refers to sitting areas for customers, shelf and chairs for cashiers, notice boards etc. I estimate that ₦50K should go a long way in handling these.
Fittings cost: ₦50K

5. Thermal printer(s)
Thermal printers are used in printing bet slips for customers. Some bet franchises offer these as part of their sign-on fees. Thermal printers range ₦27-32K
Thermal Printers: 4 pieces at ₦32K = ₦128K

6. Power supply (electricity generating set)
You will be better of with a generating set of at least 2.2kva, because of the electricity demands involved. A 2.2kva generator currently sells for about ₦85K.
Generator – ₦85K

7. TV/Cable subscription
The number of Tvs you’ll get is dependent on the types of betting events you want to cover. These may be live sports (football, tennis), virtual soccer, dog racing, ‘colour’ etc. You may need to confirm what customers usually play in your area to know which events to offer.

In my vicinity, for example, Dan observed that customers were just as interested in virtual games as they were in live games and matches. Translating this into the venture, it would then be a good idea to set up with two televisions –  one TV for virtual games, and the other for live games. Live football matches tend to draw more customers to your shop. It is also a good idea to consider buying fairly-used flat screens, and these cost between ₦30-50k. Let’s go with ₦40K for the sake of this post.
TV: (40 x 2) = ₦80K
Cable TV subscription and initial setup: ₦30K

8. Bet Franchise Sign on fees
As you will be signing under an already existing betting franchise, you will need to register and pay a sign on fee. I got conflicting responses regarding the sign on fees, so I think that these vary and are negotiable. A contact in Akwa Ibom who was about to start his betting shop revealed that he estimated sign-on fees in the region of ₦50k. Dan, on the other hand, had fees of between ₦15-20K. For the sake of this post, let us go with the higher figure of ₦50K.

Cost Summary
Shop                                                            180,000
Computer/internet                              320,000
UPS                                                               34,000
Fittings                                                         50,000
Thermal printers                                   128,000
Generator                                                    84,000
TV                                                                   80,000
Cable                                                              30,000
Sign-on fees                                                50,000
Total                                                       ₦956,000

Do not be discouraged by this breakdown. Remember that where possible, we went with the higher options figures, therefore this a worst-case scenario budget. It is easy to identify areas where costs can be cut, and cheaper deals can be negotiated.

Can I start a sports betting business with ₦400k?
Looking at the above cost summary, I would guess that with extreme cost cutting measures, this might be possible. Perhaps you could work with only two computers for a start, rent a cheaper shop, use a pre-owned generator, own only a TV, and use the cheaper internet. The major challenge you might encounter could be that you may no be able to start AND run the betting shop with ₦400K, due to the running cost involved.

Running costs

  • Electricity: If you are situated in an area where there is a decent power supply, you will spend less on your generator and vice versa. When there’s stable power supply in my area, Dan estimates that he uses around 25 litres of petrol weekly. When PHCN goes on a hiatus, that 25 litres barely lasts three days. Assuming that you run 25 litres weekly, at the current rate of ₦147 per litre, you’ll spend ₦3,675 weekly. This translates to about ₦14,700 weekly. Depending on how NEPA rolls in your area, you may receive an estimated billing of at least ₦10-15k per month.
  •  Internet: Unlimited monthly Spectranet is ₦18k. Try as much as possible to enforce that your cashiers use the internet strictly for business and nothing else. If you can work with the service provider to restrict access to all websites apart from a few, do so.
  • Workers’ Salaries: Most bet shops go for the monthly model of remuneration. However, some parties suggest using a salary + commission basis. This is good as it can increase staff motivation.
  •  Funding account: You will need to fund your bet account frequently. Funding frequency and amount largely depends on how much sales you have. Dan tells me it is possible to fund accounts close to ₦500k a weekend (Saturday and Sunday) alone. If you are in a busy area with a lot of customers, expect to fund your account at a minimum of ₦100k on most working days.

Break-even point
This business, like every other, has a gestation period before breaking-even and paying off sunk capital.

You will have to run the business from secondary income sources until it can sustain itself.
Betting companies pay commissions based on sales, and sometimes, net-profit made. The net profit is the difference between the gross sales and gross winnings over a period. Bet9ja, for example, offers a 10% commission on sales made every week. Merrybet offers up to 50% commission going by what is written on their website.

I believe that contract negotiations can be done to favour a commission on both sales and net-profit made over a period. You may need to confirm if there is such an option. A take-home profit 40-60% of your commission after expenses is good profit for a betting shop. You can reduce your expenses with time to increase your profit margin, as long as it does not affect the quality of service rendered. With great location and sales, there’s no denying the profitability in betting business.

I hope I covered just enough to set you on your way to owning a bet shop. If I missed anything, always remember you can hit me up in the comment section. If you have a betting shop or in the process of opening one, I would love to read your experiences so far.

Thank you for reading and remember to share with your friends.


Comments

  • I need it

    Felix shintoho October 22, 2017 1:46 pm
  • You are good in feasibility studies.
    I would need more of ur help for business e-mail;frankgozie2@gmail.com

    Frank October 30, 2017 2:14 am
    • Hi Frank,

      Please e-mail me : ethan@mrpepe.com and I will be happy to help

      Ethan November 5, 2017 12:06 am
  • please I think I have a least half the money to start sport betting shop. But I need a good business plan and the challenge it comes with

    Benny January 8, 2018 12:44 pm
    • Hi Benny,

      It might be helpful for you to apprentice at an existing betting shop for the time being to figure out what areas you need to improve on, in order to inform your business plan.

      Ethan January 8, 2018 2:24 pm
  • Hi Ethan, i am new to the business and i have a 9-5 job in consulting. I am considering opening a store in a good location but fear that i may not have the time to be there every day. I can only be ther on weekends.As an alternative i am considering bringing in a friend to handle the set up temporarily then also hire a female cashier. Is it wise to go this route? My premises are that i can monitor the account online den with my friend on ground i can have some visibility on operations. Kindly advise!!!

    Emeka January 21, 2018 8:38 am
  • Hello Mr Ethan, i am new in this business but i want to start this business with my friend its ok i can monitor the account online. i will like to send u personal emaill ok.

    lasisi February 25, 2018 7:00 pm
  • Pls wil love to ring you

    Tony March 8, 2018 10:23 am
    • Hi Tony,

      I’m sorry I work full time and can’t usually take calls. You can ask your questions here or email me via ctrl@mrpepe.com and I will get back to you as soon as I can.

      Ethan March 8, 2018 3:05 pm
  • i want set a bet shop

    john ojah April 11, 2018 9:42 pm
  • Thanks, Ethan for this post. God bless you.

    Abeg, what is the cost of becoming an agent for UBC365

    Help a brother abeg.

    Olayinka April 15, 2018 9:50 pm
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  • I just joined HAMABET (www.hamabet.com) and have not regretted it. Joining is free, many bonuses, 100% bonus for first deposit, 200% for first online punters deposit, payout under 24hrs, greatest odds available (you can check yourself). The company appears to have a solid financial base.

    AIYELOJA June 26, 2018 7:10 pm
  • This is a very good idea, but it needed capital to start it

    Alex July 4, 2018 2:29 pm
    • It is, but most businesses require capital whether it is investment of time or money. That’s a universal law – you have to give something to get something.

      Ethan July 8, 2018 7:42 am
  • Please I want to be a bet9ja but my shop size was not approved,what should I do please

    Saviour September 5, 2018 3:17 pm
  • Am Mr. Iburu ozoemena from Ndiagu Echara Ikwo, Ebonyi State. I want to venture 9ja betting biz and I have location/shop but no super agent who will link me and the one I met told me that bet9ja is no longer creating account to new comers. Advise me, pls.

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