How To Run a Profitable Sports and Virtuals Betting Shop

With this post amassing thousands of views in the last one year, it goes to show how much owners of sports and virtuals betting shops of either bet9ja, nairabet, surebet, merrybet or any of the numerous betting companies are interested in turning their franchise into a profitable venture.

In March 2013 I was granted permission to extend the fast growing brand of sports betting, Bet9ja to Oyo state and environs. At that time, KC Gaming Networks, the company behind Bet9ja had in less than 6 months managed to pull off what none of the incubent sports betting companies had been able to do. They were able to create a platform for the masses.

By building a business around the empowerment of entrepreneurs to be agents of the company, and positioning the product such that it was the most compelling offering available to punters, agent numbers soared and sports betting penetration increased in erstwhile under-served areas.

I setup Bet9ja’s first shop in Ibadan, then situated at Ekotedo in Dugbe. From those humble beginnings I have directly and indirectly, within and outside Oyo helped establish over 3 dozen agent shops. When I started, there was no how-to manual, no numbers, no guide on how to run a profitable sports betting shop, so if you expect to hear that my first shop turned a billion Naira, I’m sorry, it flopped! …and I learnt the lessons the hard way.

I have however shared freely the nuggets from my experience with every prospective agent I have come across, and active agents who are currently finding it difficult to break even. My agents i.e agents under my management, benefit from my stash of on-the-street experience and this has led to better performances.

N.B: This guide applies only to agents of sports betting companies that pay commissions based on sales and not profit, or a combination of both. I particularly think paying commissions on NET profit i.e what is left from sales after winnings are paid, is like a food seller that sells you food and gives you a bowl of potent laxatives to “wash it down”.

So, on to why you are here…

Starting and running an online sports betting business is like running any other business, you need to be able to answer the following questions:

  1. How much will it cost me to set up?
  2. How much will it cost me to run the business and how do I manage these costs.?
  3. How much will I make as commission?
  4. How much will I keep as profit?
  5. When do I break even?

1. How much will it cost me to set up?

Before you ask yourself this question, you need to understand your environment; the potential number of customers, the level of awareness and the disposable income. An agent in Molete in Ibadan will only put himself under undue pressure by building his shop out like one he saw in FESTAC in Lagos. The potential numbers are more, awareness higher and disposable income larger in the latter than the former.

Also, as a cautionary note, ensure you have a secondary source of income. This is so you can fund the day to day expenses of the business for the months prior to the break-even month.

To start, you will need the following

  1. A shop. Take the next few lines as gospel.
    1. Rent a shop ONLY because it is rightly located. This will mean it is in a densely residential area. A mix of 70 residential/30 commercial is just fine.
    2. Be VERY wary of rent. In big cities like Lagos 100K to 150K p.a is good enough, while in areas such as Ibadan, Ado, Ogbomosho, Kubwa, 40 to 80K p.a is just right. Let the “resident” customer density guide your assessment of rent, and not the “passing” customers i.e a major highway junction will not be as lucrative as a minor “agboo-ile” junction.
    3. The shop SHOULD be sizable. A 10ft by 12ft will be too small. Try to go for a 12ft by 15ft or larger. The bigger, the better as your customers will be comfortable while they wait their turns.
    4. If you decide to use an existing business’ shop, ensure the items on sale are not “handy”. I once had an agent who sold shoes and wanted to combine the business of sports betting. He lost 13 shoes (note not pairs i.e different legs) in his first week.
  2. 2 Laptop (or desktop) Computers: Desktops are preferable in relatively insecure environments, but tend to require a bigger generator to power. [ 2 Used laptops will go for between 50K and 70K]
  3. A 10ft x 6ft x 1ft counter made of wood (preferably of board): Having this helps separate your cashiers (attendants) from your punters (customers). [10K to 20K]
  4. Chairs (for cashiers) and benches (for customers). [10,500 to 15,000]
  5. Should you be interested in customizing your shop, you can paint it in the colour of the brand you are selling.
  6. A generator. Please I urge you not to use I-better-pass-my-neighbor. This generator is notorious for burning adapters. A decent 2.2Kva generator will serve well. [28K to 35K]
  7. Internet Modem. I recommend you go with any of the LTE providers, as faster speed equals faster money making. The likes of Spectranet, Smile and Swift will serve well in areas where they have coverage. If you do not fall within these areas, use the 3.5G GSM providers. In order of preference, I recommend Glo, Etisalat, Airtel and MTN…and if those don’t exist, you’ll have to struggle with CDMA 1x from O’net or Visafone or GPRS from the GSM providers. If you use laptops, get a modem that supports Wi-Fi for easy connectivity. [18K to 40K]

You most likely will be given the following items by the company:

  1. Thermal receipt printers. New POS-58 or POS-80 units come with a roll of paper.
  2. A Banner, to advertise your business to passers-by
  3. An account on their platform.

Of course, you get the last 3 items after you must have paid the signup fee [ 50K to 500K]. I’ve been informed some (new) companies will give you these items for free.

Conservatively, you will require between 250, 000 to 400, 000 to setup, depending on your location.

To summarize this section, I strongly suggest that you prepare to setup at least 2 shops in order to benefit from economies of scale.

This is where I put a halt to it for now. This post will be concluded before the week rolls by – remember I’m supposed to be on holiday.

Ramadam Kareem

Update: Click to read the concluding part of this post