SportPesa, Kenya’s leading online sports betting has folded up. This is the second and possibly the last sign that it has been incapacitated by the new tax regime introduced by the Kenyan government against gambling firms. The first was when it pulled sponsorship from the country’s sports teams after the government in Nairobi hiked gambling tax rates from 7.5 to 35 percent.
This tax decision will have a damaging impact on both customers and treasury,” the company stated in its reply. “Further compounded by the currently in-effect 20% Withholding Tax on Winnings, the economic incentive to place bets will be completely removed as the taxes will deprive consumers of their total winnings. This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya.
Here Is All You Need To Know
- SportPesa and other sports betting entities have faced significant government opposition in Kenya.
- Last month, Uhuru Kenyatta, the country’s president, called on lawmakers to ban gambling. His call came after the country’s Betting Control and Licensing Board ordered telecommunications companies to suspend the shortcodes and paybill numbers the sportsbooks used to exchange funds with their customers.
- Part of the backlash from legislators stemmed from social concerns. One lawmaker noted a rise in suicides from young men who took up betting on sports through their mobile devices.
- Kenyan officials also expelled nearly 20 foreign business leaders who were working for sportsbooks in the East African nation.
- SportPesa and Betin then joined forces to file a lawsuit against the government, but that the country’s Supreme Court dismissed the legal challenge. In doing so, Justice John Mativo noted SportPesa’s license had expired, which meant the company could no longer operate legally until it reapplied for one.
Major Sponsor in Soccer
Even with its troubles in its native country, SportPesa still enjoys a relatively high profile in Kenya’s sports betting industry. This is thanks in part to the sponsorships it holds with soccer teams and leagues across the world. That includes Everton, in England’s Premier League, and Hull City, which plays in England’s second-tier Championship league.
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However, even British lawmakers have begun to question whether its professional soccer teams should enter into partnerships with sports betting operations.
SportPesa also serves as the official African betting partner for LaLiga, which runs the top soccer leagues in Spain. It also sponsors Italian club Torino FC.
“If local communities enjoy it, we know that our involvement can be an extremely positive influence for all concerned,” SportPesa says on its partnerships page. “While we offer valuable financial support, we also go much further: helping clubs build capacity and join corporate social responsibility initiatives to create value for players, teams, communities, and businesses.”
Mass layoff
The move comes after another firm, Betin, sent home all its employees saying they have run out of finances.
According to the firm’s management, efforts to hammer a deal with the government which could have seen it resume operation have failed, forcing the firm to send home employees.
“Management has had several extensive meetings with the government entities regarding the company’s licence without much success,” read an internal memo signed by the managing director.
“Given all these, we have had financial constraint as you might all expect. As a result of the deterioration of the profitability, the management has had to rethink its operating model and to proceed with the exercise of termination on account of redundancy.”
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based Lawyer with special focus on Business Law, Intellectual Property Rights, Entertainment and Technology Law. He is also an award-winning writer. Working for notable organizations so far has exposed him to some of industry best practices in business, finance strategies, law, dispute resolution, and data analytics both in Nigeria and across the world