Smart move or lousy gamble?

Multichoice’s $81M BetKing Stake Buy: Smart Money Or Lousy Gamble?

By  |  November 17, 2020

The previous week was nearing TGIF time when Africa’s biggest Pay-TV operator, Multichoice, made a big announcement that even the rumour mills missed.

The company revealed it had acquired a 20 percent stake in one of the fastest-growing Pan-African sports betting companies around: BetKing.

This acquisition was disclosed by Multichoice CEO, Calvo Mawela, during a press briefing that followed the release of its half-year results. The company hinted that the deal is part of its plans to expand its entertainment ecosystem, and thereby sees a lot of prospects in the acquisition as sporting events contribute a sizeable portion of its revenue. 

“We have a lot of sports on our platform, and many people that are betting watch more games,” he said.

As per the specifics of the deal, Multichoice made an upfront investment of USD 81 Mn (ZAR 1.3 Bn), but that’s not all. The company also alluded to the possibility of a further payment of USD 31 Mn (ZAR 500 Mn) if certain financial targets are met by BetKing between December 2021 to December 2023.

For Multichoice, this acquisition has been pursued with the target of shooting up its revenue in Africa.

The Pay-TV company has of late incurred higher-than-before expense in acquiring broadcasting licenses that would enable it to continue to hold its European football rights, which happens to be one of its core propositions. In addition, the company’s revenues continue to suffer, especially outside of its home country, South Africa.

Hence, this deal with BetKing is a part of its plan to increase revenue and thereby provide supplementary funds.cIts stake in BetKing could see Multichoice grow its revenues with sports betting. 

This part-acquisition is coming at a time where the betting industry in Africa is recovering from the downtime it experienced earlier in the year due to the pandemic. Upon the global outbreak of the novel coronavirus, several sporting activities were put on hold. For sports betting companies, this was bad news as business was crippled. 

In any case, sports betting remains a rapidly growing industry with great potential to boom in Africa. And quite a lot is happening in that space.

Africa’s sports betting industry

General sports betting in Africa is mainly dominated by football and horse racing, with the round leather game taking the lead. Africa’s most populous country, Nigeria, has about 60 million adults in general who engage in sports betting, and this represents a sizeable local market.

In 2018 alone, Nigeria, South Africa, and Kenya together generated close to USD 40 Bn from the betting industry.

A likely catalyst for Africa’s growing betting industry can be tied to the staggering number of young people on the continent, and it’s no secret that betting is an activity that is particularly popular among the adrenaline fix-seeking young..

On the continent, there are more than 200 million people between the age of 18 to 24 which make about 16 percent of the continent’s overall population. In Kenya alone, 80 percent of the population is known to be younger than 35.

Away from the fact about the continent’s large number of young people, another possible reason for the high adoption of betting on the continent is the high unemployment rate and economic decline.

These may also be contributing to the increasing popularity of sports betting as more people seem to be willing to take their chances to escape certain financial realities even though the desperation constitutes yet more problems. 

So why BetKing?

If the time of a company’s launch is anything to go by then BetKing is more like a newcomer. Although the Nigeria-based betting company only launched in February 2018, it may have made waves that outweigh its period of existence.

BetKing actually arrived on the online betting scene at a time when the industry was flooded. Popular local brands like Bet9ja, Nairabet etc. and even a couple of foreign betting franchises had already hit the ground running. But since its arrival, BetKing has managed to grab a healthy slice of the cake. 

Although BetKing calls itself a Pan-African betting company, it currently operates in only three African nations: Nigeria, Kenya, and Ethiopia. However, the company likes to identify as one with great growth prospects and the new deal with Multichoice could as well cause it to expand exponentially.

Multichoice’s stake buy seems ideal as BetKing has built a business out of the deep passion and massive following for sports which is one of Multichoice’s core offerings, as the Pay-Tv company holds the rights to key sporting events. How’s that for a match made in heaven?

BetKing believes that it can dominate the betting scene by providing the right technology, innovation, and good service to all bettors and Multichoice seems well-poised to play a key role in accelerating the achievement of BetKing’s mission.

As things gradually unfold with time, this deal might just prove the catalytic force for BetKing’s further expansion in Africa while simultaneously benefitting Multichoice by boosting its revenue.

Feature Image Courtesy: Designed by katemangostar / Freepik“>Kate Mangostar/Freepik

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