Inside the Growing Betting Market

Sport betting is becoming popular and expanding at an astonishing rate in Addis Ababa. Despite the fact that it is a new phenomenon in Ethiopia, it is quickly gaining momentum. Motivated by this demand, many companies are starting to invest in the sector, which requires moderate capital. EBR’s Kiya Ali explored the nitty-gritty of sport betting and its growing acceptance in Addis.

For years, Yiregedu Chane was an employee in a Turkish-owned sport betting firm in Iraq. Working in various positions within the company from cleaner to cashier helped her understand the nitty-gritty of betting. After a brief stay in Iraq, she decided to bring her business know-how back to Ethiopia.

After returning to Ethiopia, Yiregedu went to the National Lottery Administration. But what she found was disappointing. There was no legal framework to entertain sports betting companies, but Yiregedu, and others who wanted to set up similar businesses, did not give up. She finally persuaded the National Lottery Administration to enact a new law. Capitalizing on this opportunity, she established Axum Betting, one of the first firms in the sector, with a startup capital of one million Birr three years ago.

“As we were the only active betting company when I established my firm, it was very challenging, mainly because of the lack of a legal framework. But we challenged the government and fixed the problem,” says Yiregedu, whose company’s capital has increased five-fold since its establishment. Her company currently employs 25 permanent and 150 temporary staff.

Unlike when Yirgedu returned to Ethiopia, sport betting is now very popular in Ethiopia, chiefly because of the increase in fans of European football leagues. Right now, there are 10 licensed local betting firms, while another five are under establishment. The aggregate capital of the betting companies is estimated at ETB20 million, and they’ve created job opportunities for thousands of people. Betting companies have also become a source of income for many customers.

Even in the morning, when the doors of betting houses have just opened, people like Daniel Fikre fill up the space, waiting to place bets and watch games. Every weekday, an average of 450 people come to Axum Betting, while around one thousand people come in on the weekend.

Daniel is a 19 year old first-year accounting student at a private university in Addis Ababa. Daniel, who has been a football fan since childhood, heard about betting from his friends. When he first placed a bet, he lost. But five months ago, he finally won ETB 5,000 from Galaxy Betting, a firm located around the Haya Hulet area on the way to Bole Medhanialem, after placing an ETB25 bet. “At first, I used to bet for fun. Now it is beyond entertainment. In fact, it is a source of income,” says Daniel.

Others such as Girma Alemu (name changed upon request), who is a customer of Abyssinia and Galaxy Betting, see betting as a recreational activity. Most of the time, he bets during weekends. It is been a year since he became a customer of Galaxy Betting and he recently started betting using the Abyssinia web platform. “I’m not addicted to betting. I just play to have a good time with my friends who are fans of football. Even a small ten birr bet can get you excited about any game that you are not even a fan of,” says Girma, who won ETB3,000 and ETB1000 one month and seven months ago from Galaxy and Abyssinia, respectively.

Many people have had similar experiences. A glimpse into the capital’s sports bars shows just how much a part of urban life betting is becoming. Anyone who would like to place a bet can go to any firm that provide such services and place a bet from ETB30 to as high as ETB300,000. The bettor then receives a receipt as a guarantee for when and if they manage to win the amount pledged by the betting firm. But from the firm’s point of view it is not as simple as the name suggests.

The firm needs a way to effectively predict a result or series of results. But results don’t only mean final match scores, or winners. Anyone can place a bet against goals scored, winning margin, or which player will score. All of these bets rely on the scoring records of the teams involved, and then making a sensible bet as to which way the result will go. Getting familiar with odd formats is the ABC of betting. Odds are not hard to understand. If, for instance, a certain team has a higher chance of winning, the bettor will get less money if they bet on them. If the team has a lower chance of winning, the bettor will win more money.

There are usually three odds formats in sport betting. The moneyline odds come with a positive number, which states how the bettor would win a certain amount of money, and a negative number, which shows how much the bettor would need to place to get the amount they want to win. The other format is the decimal odds, which shows how much the bettor would receive for every bet they place. On the other hand, although they are rarely used, fraction odds show how many units any bettor could make for every unit they bet.

People who have become familiar with these formats are able to earn thousands. For instance, Axum gave three winners their highest payout of ETB300,000. The company pays an aggregate of seven million birr, on average, every month to winners, while it makes an average monthly profit of ETB300,000, according to Nazism Akgun, betting finance and management expert at Axum.

The later entrants into the industry, including Galaxy Betting, have gone down the same path. Recently Galaxy paid out ETB1.3million to one of its clients, who bought tickets with a maximum value of ETB 300,000 each and won all of them. “The business is unpredictable and inconsistent in nature. Your current monthly profit may become the next month’s payout,” says Saron Solomon, owner of Galaxy Betting, which has 150 permanent staff.

The law of large numbers guides the betting market. Taking this into account, Axum Betting has opened 25 branches in Addis Ababa alone, and two additional branches in Bahir Dar and Jimma. Similarly, Galaxy Betting has 30 branches in Addis Ababa and has finalized preparations to open offices in Mekelle and Hawassa.

Despite being a new phenomenon in Ethiopia, betting has been around for a long time in the rest of the world. Even in neighboring Kenya, the annual turnover of the betting industry is estimated at around USD20 million and is expected to reach USD50 million by 2020, according to a 2017 study by PriceWaterhouseCoopers. The same study revealed that betting companies in Kenya pay USD28.3 million annually in taxes. The same growth is seen in many countries across the world. Globally, it is estimated that the gambling market will be worth USD635 billion by the year 2022, according to Dublin-based Research and Markets.

Considering the age of the industry, this is expected. Historical evidence suggests that sport betting can be traced as far back as the Roman Empire in the 1st Century. Contests that had winners and losers often attracted wagers from spectators who would place bets on the outcome of these competitions. Back then bets were placed informally among friends, colleagues or family members. But now it has become institutionalized, with many branches and forging its way into new areas.

Despite being increasingly popular, some worry that betting can become an addiction and interfere with peoples’ livelihoods. Daniel, for example, is a gambler who fell into that trap. Although he started betting for fun, he ended up developing an addiction. He started incurring debts to pay his way, in the hope of repaying them when he won. Even if he did win five months ago, he used the money to gamble again in the hopes of earning more.

“I even lost the money that should have gone towards tuition. I was obligated to borrow from my friends. If my friends were not willing to lend me the money, my fate was to drop out of school,” Daniel, who plays at least four times every week, tells EBR.

Betting addiction is more common in countries where the business is developed. According to some studies, an estimated 10 million people are addicted to betting and other gambling games and over six billion dollars is lost every year to gambling addictions worldwide.
But Nazim argues that despite the potential for addiction, it all depends on personal behavior and emotional strength. “Everyone is playing voluntarily and makes a conscious choice. They can stop betting any time if they don’t enjoy it anymore,” he states.

Ashenafi Nigusa, owner of Abyssinia Betting, agrees, although he takes a different perspective. He goes as far as saying that betting protects young people from being addicted to alcohol, khat, hookah and cigarettes. “It is a cheaper means of entertainment with a chance of winning up to one million birr for those who are lucky. It is just like the lottery,” says Ashenafi.

Abyssinia Betting is an online sport betting company that has mobile applications and website platforms. Money transactions between customers and the company are conducted using the Hello Cash mobile money platform. Abyssinia’s betting platform does not allow account holders to bet more than five times on one game and the highest amount per bet allowed to be placed is ETB500; the minimum is ten birr.

Although Abyssinia started providing services at its full capacity, with 15 employees, two months ago, it has paid out a total of around ETB100,000 to 30 of its clients. “The driving force that pushed us to open a betting firm is to provide an opportunity to those who would like to use their sport knowledge to earn money. It is also a means of entertainment that can make even the most boring game interesting. But it is not an addiction as some claim,” Ashenafi adds.

Studies show that direct spending on sports betting is anticipated to generate broader economic impacts through downstream demand for goods and services and as employees spend their wages. Girmachew Kebede, a sport commentator with over a decade of experience, says as long as the whole process of betting is regulated by law, its benefits outweigh the adverse impacts. “Before betting firms opened in Ethiopia, betting was done informally among friends, and people who knew each other. But since betting has become formalized and legalized, it will help cut down on informal and illegal activities. Besides, the firms are obligated to give back to society via tax and corporate social benefits,” argues Girmachew. “When the betting companies’ capacity increases, they will be able to sponsor different sport competitions, football matches and finance training costs for sport clubs.” However if there is no strong rule and regulation that would monitor sport betting properly, that is where the problems start, according to Girmachew.

8th Year • May.16 – Jun.15 2019 • No. 74