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Yahaya Maikori: Gaming Is a Parasitic Industry

Yahaya Maikori: Gaming Is a Parasitic Industry

There is hardly anybody who is somebody in the gaming industry whose path has not crossed with Yahaya Maikori. GAMING WEEK recently had a very revealing session with the enterprising lawyer who knows the gaming industry like the back of his palm

You were active as an entertainment lawyer. How did you get into the gaming industry?

I’m a lawyer by training, an entertainment lawyer. I’m the founder of Law Allianz, which is an entertainment law firm based in Lagos. I got into gaming in 2006/2007. I was acting as a lawyer to some South Africans who had invested in a pension company. After some years of running the pension company, they were exiting, and while exiting, they were looking for what else they could do with their money in Nigeria, so they decided to look into setting up a casino in Abuja, then. As the only lawyer they knew, they basically just said I should help them to get the licence. And that’s how the journey started. 

So it started with me trying to secure a license, trying to identify the ideal agency of government to get a casino license from. From then on, we launched a casino, and I started working with them. Thereafter, there were so many people, and I think that was about the time gaming was becoming a bit more popular, especially in South Africa. 

We had lots of guys from South Africa, people looking into going into sports betting. And because I was already in the industry anyway, I was that known person to this set of people. The word spread around that there was this gaming lawyer who could help them with their licence, and that is basically how I started in the industry. 

Shortly after that, having done lots of work, travelling from Abuja to Lagos to do lots of work – get licences and other stuff like that; that’s when I eventually moved to Lagos to finally settle and get more involved in the industry, advising clients, working with regulators, lots of companies seeking legal opinion on Nigeria. Not just that, again, it can be extended beyond Nigeria to other African countries. So that journey has led me to advise clients across Africa. I think seven or eight other jurisdictions and I also work with a couple of regulators across Africa, as well.

You have helped so many of these companies to establish their operations in Nigeria and have also acted as an external consultant to the NLRC. Please talk about these roles

Normally, when you are starting with an industry, the easiest way to galvanise the industry is through conferences. And I think when ICE started, I was one of the first persons to speak on ICE as an African… on behalf of Africans. So they started creating lots of panels for African speakers, and that’s how that spread, but because there were very few people who started that year, I was the kind of go-to person. There were lots of referrals. Even when they were asking questions about events across Africa, my name kept coming up simply because of the amount of work I have done for several clients. At some point. I think about seven years ago, we held the first Sports Betting West Africa conference in Nigeria, which was the first in Nigeria. And after that, we brought in the National Lottery and many other regulators from across the states to participate.

Thereafter, they called me to know if I would help them look at the structure of the regulatory commission. Also, see how we can insert more vibrancy into the regulatory environment. That’s how I got the call from the National Lottery. After that, I have gone ahead to advise at least seven or eight states in Nigeria. That’s apart from the National Lottery. In short, that’s how the engagement started with the National Lottery, and it went on for quite a while, both officially and unofficially. 

Of course, many other people have come into the industry now, but I was one of the first people to give them advice. Before then, I had encountered the National Lottery, which was when I was in Abuja in 2008/2009 when they were trying to regulate the casino business. We basically worked with the Association of Casino Operators. The industry has moved from then on. We did some work, and we will continue to do this, both officially and unofficially. 

Can we understand your involvement at that level as an operator?

At that level, what happened is that things started moving online. Many state governments did not know how to generate revenue from this industry. That’s where we came on board. We came on board again, not just even helping them in terms of the law or in terms of revenue collection, but we came in terms of investing in a proper state lottery, but I think they did not understand what it meant, and many people felt threatened. They did not seem to understand the structure of the transaction. There was a bit of frustration. Eventually, we went on to work in Anambra State for years, maybe seven years or thereabout, but the full value of what we could have brought couldn’t succeed because it became politicized. Few people were playing dual roles, both as regulators and as investors, but they didn’t understand the structure of the agreement between us and the state government. So we’ve done that, and we’ve gone ahead to do that in a couple of other states. 

Is there a state where the proposed model succeeded in the manner you expected?

After that, I think that we have written the playbook for this industry, substantial in certain areas. Many other people have come to do this with states. But I don’t think they are getting the full value of it. Some don’t really have the investment; we came with the investment. So, some of the people are just collection agents. They still do not have any kind of framework that will help them effectively; help the state in terms of regulations, but we came with the full investments, which was kind of frustrating to that extent. 

If you were to advise, what would you have the states do?

Every state is different. First of all, look at the capacity of the state and the size of the market. If you look at Lagos, it definitely needs a proper regulatory board. It is a huge market, it is a commercial city. Most of the money comes from Lagos State. If you go to a place like Zamfara, setting a whole board may not be necessary. It is not going to succeed. It is a waste of time. It is fine to just help in terms of revenue collection. What you could alternatively do as well is to galvanise your revenue board. That’s a way of looking at it. 

That’s if they have the skills. The problem with gaming is that gaming is a parasitic industry. It parasites on sports. It is not an industry on its own, it doesn’t really have any value on its own. The value is when you benchmark it or when you layer it on sports, on media, on all those other things that come to converge. We are moving in a very converged industry right now. 

And you know, the technical ability, the knowledge to understand how this is playing out is part of the challenge. First thing is to get people to even have the knowledge, the understanding of the industry and then possibly you can look at how you, as an individual or even as a consultant, could do that. What most people are doing now is just really scraping the surface of what they can potentially do in this industry. 

What are some legal bottlenecks plaguing the gaming industry?

In almost every industry, there are always legal bottlenecks, and that’s why we always go to court to get legal interpretation. So, there are so many things that are happening… possibly I would refer you to my keynote address when the National Lottery had its first stakeholders meeting. I gave the keynote address. And in that keynote address, I gave them what the solution was to what these perceived challenges are. I think the big challenge for most operators is the issue of jurisdiction between the national agency and the states. That’s the fundamental problem, and they can go either way, depending on how you want to argue it. But whatever we do is tied to our constitution. Every other power, state or whatever is derived from the constitution. What the constitution says can also be surmised by saying that things have also moved drastically. When most of these laws were passed, e-commerce was not a thing. Now we are in the era of e-commerce. Whatever you do, physically, there’s a digital side of it. These are things that we can explore and find a resolution. I think the solutions are particular, but as I said in my keynote address at the first National Lottery Gaming Conference, I proffered solutions. How that moves forward again depends on the regulators.

Some gaming operators argue that having both federal and state licences is unwise. What is your view?

The issues are pretty simple. The issue here is a matter of scale. If you don’t want a national licence, that means maybe you are on a smaller scale, and your capacity is on a smaller level. We all can’t be national operators. We all can’t be international, and some of us may just want to be municipal operators. So, I can understand people saying, ‘We don’t need two licences’, because it amounts to double taxation, double regulation that stretches you in many other ways. But the flip side of the argument is to say, ‘I also do not need to have a national licence because my operation is not national. It’s a local operation’.

So, are you saying they can choose to have one and not the other?

The way it is now if you look at the way they operate, it simply means they have a choice, and the choice is theirs.

But most of them are online.

Yes, and that’s where the issue is because, as we speak, there is no online regulation in Nigeria, and not at the national level. Even if it is at the national level, people are questioning the National Lottery’s powers to do that. But then, if you are at the state level and you are online, that means that you are on the national level because anybody can access it from anywhere. So, you’re also encroaching on the powers of other states. The argument can go either way. In the US, every state regulates its own, but that was about three years ago when the Supreme Court decided on the matter. 

We understand that because, in the US, each state is in charge of its resources. 

Yes, but that was just about three years ago when the Supreme Court said states could. Before then, it wasn’t like that; online was allowed. So the evolution of every industry and the context in which you find yourself determines how the law grows. Until three or four years ago, America wouldn’t allow online gaming simply because the retailer was too invested in the physical infrastructure for them to allow someone to just put in software and start staking bets. 

Don’t you think this tussle will lead to more brain drain and unemployment if the environment isn’t exactly an enabling one? 

You know I wear so many caps. As I said, if you went through my keynote address, I think it was very profound. It addresses so many situations there. So I can understand why ‘national’ would say that they.   

Can you talk about your connection to the Kaduna stadium? 

So what they have in Kaduna is the Pro-City soccer league. In terms of the stadium, it was about the football team itself. We had those discussions, and then when COVID came, it didn’t make any economic sense to move forward because we did not know how things were going to …after five, six months of lockdown, with business just starting to pick up now from COVID, so that lockdown kind of stalled what we were doing. I won’t say terminated but stalled that discussion. But what we did after COVID immediately was to host the five-aside Pro-City soccer league. We held the maiden one in 2021. Last year, we partnered with the state government. 

The state government was really excited about what we did in 2021, and they are partnering with us now. Again, we were meant to have hosted the second one early last year. Then we had the security challenges in Kaduna when people could not fly in. Planes could not move in. Again, that stalled. And then, last year, we did the female version of it. We did that in collaboration with Aisha of FIFA. She is a director of FIFA and the trustee of the FIFA Foundation. The whole idea is to see how they can support us in coming out of banditry in Kaduna and engage more youths. In December last year, we had the female edition, and in the next two or three weeks, we are going to go into the male competition, which should end sometime in late May.

In 2016, you said the sports betting sector was worth over N40 billion. What’s the picture now?

Years back, I was telling a friend of mine, even before the interview then, that our company was doing N1 billion turnover a year. He thought I was lying. The person could not believe it. It didn’t make sense, and that was about some seven, eight years ago. That is a huge amount of money, but I am sure that there are companies that are doing N1 billion turnover a day, conveniently in 2023. You have to understand that the entry point is very low now. I can bet with N100. Look at the population, about 200 million people. On every street corner you go to, there is a betting company there—low entry level. So, everybody can practically participate in it. So, it’s not unusual; those figures are… I am not confirming, but those figures are easy. But they have to now differentiate that with the profit because there is also a high payout in this industry, and that’s why there’s a high turnover in sports betting companies because as you’re collecting, you are paying out, and you are paying almost those numbers. 

Many go out of business because they don’t have the financial will to stand it. So, if you look at the Adesanya fight, most people put their money on Pereira, so you can imagine the offset. You can imagine the few paying out. 

So, you have to look at the industry in a converged state. Eight years ago, look at gaming or sports betting or lottery or whatever it is on its own. But now, it is part of the media. Now it is technology. Now it is game development. Now it’s data collection. So you must look at it in a converged state, and the value chain has moved significantly, so when it comes to the issue of regulation, you might not even know where to stop or continue. In the UK, they have passed a law that sports betting companies can’t be front-shirt sponsors. When you endorse a product, you are significantly saying so many things: ‘I am successful because I wear this. I’m successful because I’m affiliated with this betting company’. 

I think that’s one thing we need to look at as well in Africa. We need to look at the effect of this, the negative side of sports betting. That’s something we need to address, and I always appeal to regulators: ‘What you need to focus on is what they call the ‘lifetime value of a player’. You want a player who can play for you in the next 20 years, not someone who can only play for you in the next one week. So, when there is an issue of addiction, of abuse, and people are either committing suicide or they are stealing money from their parents to go and bet, we have a big problem with that. We need to address the issue of addiction. 

So you don’t think we have a gambling addiction problem yet?

We do. But how are you going to know? If I am doing it online, how would you know? We need to put in mechanisms that can help address that. Fish people out. 

What sort of mechanisms are there? 

There are all sorts. There is self-regulation whereby… even on online platforms, there are some that lock you out depending on the amount of time you spend or the threshold of the money you spend. Even the family need to understand to look out for their loved ones. 

Some argue that some of these operators aren’t yet compliant because they need to increase profit margins

Compliance is not what you leave to the operators. It is what the regulator needs to enforce. 

Would you say the regulators are doing a good job at enforcement? 

I wouldn’t say that, but I just think that there hasn’t been enough energy or enough focus on that, and it is so important because the backlash of it can also come back to haunt the industry. If you look at what happened in Kenya, and that’s why the industry is in disarray, Kenya was the biggest market next to South Africa, and Nigeria was third. I am talking about three or four years ago, up until the new tax and the new laws destroyed one of the biggest brands called SportsPesa. SportPesa was sponsoring one of the biggest teams. I think Liverpool. That’s how big they were, but then, the government started seeing lots of addiction. 

Kids in the morning were going to play stakes in gambling houses, and they started feeling that this thing is not good for this country, so they started placing some heavy taxes, and these are the kind of things that destroyed the Kenyan market. It is no longer the vibrant market that it used to be. So, when you leave this to the regulators, it can come back and bite you. It is not just the regulators. There are parents. There are people who have their loved ones. They are watching them, so there can be backlash. We need to control that narrative from the way you enforce to keep those mechanisms to reduce the likelihood of abuse. 

QUOTE

You have to look at the industry in a converged state. Eight years ago, look at gaming or sports betting or lottery or whatever it is, on its own. But now it is part of the media. Now it is technology. Now it is game development. Now it’s data collection. So you must look at it in a converged state and the value chain has moved significantly, so when it comes to the issue of regulation, you might not even know where to stop or continue 

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