MultiChoice is proceeding with plans to grow its sports betting business, having launched an SA service in addition to its Nigerian and online units.
Africa’s largest pay TV operator, which uses sport as a big drawcard to its DStv and Showmax Pro platforms, is investing heavily to take up market share in the continent’s rapidly expanding sports betting market.
In June 2021, the group paid $281.5m to increase its stake in BetKing, a digital and sports entertainment platform that focuses on Africa, to 49%. It initially bought a 20% stake in October 2020. Blue Lake Ventures, which traded as BetKing, recently changed its name to KingMakers.
The purchase is the biggest by the DStv operator since it was spun out of Naspers and listed on the JSE in 2019.
The group continues to develop and launch new services in the Nigerian market, but the core development focus for KingMakers is the platform’s expansion in SA, MultiChoice said in its interim earnings statement.
BetKing debuted the service locally, through a soft launch of SuperSportBet on November 9.
“We are glad that they have been able to launch the beta platform. That shows a lot of progress in SA. It’s up and running you can go, play around with it and see how good it looks,” MultiChoice boss Calvo Mawela told Business Day.
“We believe very strongly that betting still has a great opportunity on the African continent.”
According to US firm Vantage Market Research: the global sports betting market was valued at $81.03bn (R1.5-trillion) in 2022 and is forecast to reach $167.5bn by the year 2030.
Data from the National Gambling Board of SA shows that gross gambling revenue in the country more than doubled to R47.2bn in 2022/23 from R23.25bn in 2020/21.
“I think we’re still scratching the surface, even in SA. There’s still a big opportunity for growth and we believe the combination of SuperSport and a good platform that Kingmakers is able to bring, should put us in a different position compared to other competitors in the market,” he said.
“And we should be able to leverage our reach going forward to be able to drive people to play with SuperSportBet.”
Mawela is confident that the business will soon be profitable.
KingMakers is said to have narrowed its loss after tax to $8.6m in the period, “despite some challenging results in February for global sportsbooks, the investment ahead of the launch in SA and incurring losses on cash remittances from Nigeria.”
The group said the business, “although impacted by the weaker naira and challenging macro environment in Nigeria, continued to deliver strong underlying operating momentum”.
Nigeria’s latest forex policy, announced in June, is a big departure from the previous regime, which was characterised by multiple exchange rates and tight government controls. Under the new policy, the value of the naira will be determined by market forces, rather than by the central bank. That means the currency is now free-floating, and its value can fluctuate based on supply and demand.
The naira has lost about half of its value since the policy came into effect, hurting companies such as MultiChoice and MTN, which have large operations in the West African country. Such companies are also contending with a weaker rand in their home country, making foreign payments more expensive.
KingMakers reported organic revenue growth of 22%, led by its online sportsbook, where active users increased by 17% and its revenue contribution rose 40% year on year. The weaker naira resulted in reported revenue increasing only 2% to $95m (about R1.8bn).
The group said KingMakers is focused on “optimising the profitability of its agency business and growing its higher-margin online business that together with the opportunity presented by the new SA business, will support its path to sustainable profitability.”
It said the product and market expansion plans are fully funded, with KingMakers having $134m cash by the end of June.
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