Back in September 2020, MultiChoice, an African company, made a big investment in a Nigerian online sports betting company called KingMakers, which later became known as BetKing. They bought a 20% stake in KingMakers for a whopping $112 million. Not stopping there, MultiChoice decided to increase its ownership and purchased an additional 29% stake in 2021, bringing its total ownership to a significant 49%. This additional investment cost them $281.5 million, making their overall stake in KingMakers worth a staggering $393.5 million.
Unfortunately, MultiChoice’s investment in KingMakers hasn’t gone as planned. In their latest financial results, MultiChoice revealed that they have experienced a substantial loss in the value of their investment. The combination of the devaluation of the Nigerian currency, the naira, and the high costs associated with expanding the business resulted in a write-down of approximately $108 million. This means that MultiChoice’s stake in KingMakers, originally valued at $393.5 million, has now decreased to around $248 million.
Initially, the investment in KingMakers seemed promising for MultiChoice. They intended to leverage their extensive sports coverage to boost the online betting company’s business. This model has proven successful for sports broadcasters like Sky, Fox, and ESPN, which have ventured into the sports betting industry. Additionally, internal data cited by KingMakers indicated that a significant portion of DStv subscribers, approximately 77%, were active bettors or engaged in match predictions. This presented a substantial customer base for a betting product.
The African gambling market, especially sports betting, has witnessed remarkable growth in recent years. According to a report by KPMG, the market is projected to reach a value of $37 billion by 2022. MultiChoice acknowledged this growth potential and saw the acquisition of KingMakers as an opportunity to tap into the market. They believed that Africa, which accounted for only 2% of global sports betting revenue, had the potential for significant growth in this sector.
Despite the optimistic outlook, MultiChoice has faced several challenges with its investment in KingMakers. While the company has experienced revenue growth, with KingMakers’ revenue increasing from $131 million to $198 million between 2022 and 2023, their losses have also escalated. The losses rose from $19 million in 2022 to $28 million in 2023 due to heavy investments in scaling the business and losses associated with cash extraction from Nigeria.
The fate of MultiChoice’s investment in KingMakers depends on how they address the operational challenges and turn the business around. Experts suggest that consolidation and a focus on profitability should be the priority for KingMakers. MultiChoice could play a more active role in the company’s operations to improve its performance. However, it remains to be seen whether MultiChoice can salvage its investment and achieve a turnaround in the face of tough competition and a competitive market.
MultiChoice’s ambitious investment in KingMakers, a Nigerian online sports betting company, has proven to be a costly gamble. The devaluation of the Nigerian currency and high expansion costs have led to a significant write-down of $108 million in the value of their investment. Despite the challenges, there is still hope for MultiChoice to salvage its investment and achieve success in the African betting market. However, it will require careful strategizing and effective management to navigate the competitive landscape and turn the tide in their favor.
