One year ago, Kenya’s leading sport betting firm, SportPesa, shut down its Kenyan operations and sacked more than 450 of its workforce. Last year, the Kenyan Parliament’s Finance Committee had imposed a new 20% excise tax rate on betting stakes, representing an increase from the 10% stake which the treasury had proposed in June 2019. SportBesa and its major competitor Betin couldn’t bear it. Although a Kenyan High Court initially blocked collection of the tax, the Kenyan Revenue Authority and Betting Control and Licensing Board agreed on 1 July, 2019 to withdraw the licences of 27 companies who failed to pay the levy, including SportPesa’s and Betin’s.
Now, one year after, SportPesa is back, but under a different license, even though another High Court in Kenya had declared Thursday the new laws, including the Finance Act 2018, the Tax Laws (Amendments) and the Statute Law (Miscellaneous Amendment), which contained the new betting tax rate as illegal.
“SportPesa is back! I’m happy to announce that the SportPesa brand is back under a new BCLB licence holder, ” tweeted betting firm’s ceo Captain Ronald Karauri.
The Background To All These
- In 2019, both SportBesa and Betin stopped doing business in Kenya due to what they saw as a hostile tax environment.
- The government in Nairobi hiked gambling tax rates from 10 to 20 percent.
- In its ruling, the court determined that the tax could only be applied to a player’s winnings at the end of every month, and that the Kenyan Revenue Authority must collect revenue from customers, rather than directly from operators.
- Ronald Karauri welcomed the ruling, suggesting that it may prompt it to reconsider its withdrawal from the Kenyan market.
“We have long advocated for a fair and level playing field and a regulatory and taxation environment that both supports business and inward investment, and is in the interests of Kenyan consumers,’’ he said.
“SportPesa will now reconsider the future of its operations in Kenya,” he added. “We encourage the authorities to take the Tax Appeals Tribunal ’s ruling fully on board and to now apply a reasonable approach to gambling regulation and taxation, in line with international best practice.”
- The dispute over the winnings tax dates back to its introduction, with SportPesa arguing the tax removed incentive for customers to place bets.
- Although the Kenyan High Court initially blocked collection of the tax, the Kenyan Revenue Authority and Betting Control and Licensing Board agreed on 1 July to withdraw the licences of 27 companies who failed to pay the levy, including SportPesa and Betin.
- After the state ordered telecoms company Safaricom to block banking services to the 27 companies, leaving customers unable to deposit funds — a move SportPesa said violated a court order — SportPesa ended its sport sponsorships in Kenya and placed its 453 employees in the company on leave.
- A SportPesa spokesperson told iGamingBusiness.com in early September that the company believed it was heading towards the resumption of normal operations after constructive talks. However, on 19 September, the Kenyan Parliament’s Finance Committee proposed a new 20% excise tax rate on betting stakes in the 2019/20 budget, an increase from the 10% stake proposed by the treasury in June.
- In response, SportPesa that it would not operate in the country until the rate was changed, and laid off its Kenya-based employees.
A New Chapter
According to CEO Kanauri, SportBesa’s new journey will begin with a different license, Betting Control and Licensing Board (BCLB)licence.
Mr Karauri said SportPesa will uphold the highest standards of service and responsible gaming, adding that they are ready to work closely with BCLB and all other stakeholders in the gaming industry.
“As market leaders, SportPesa will focus on upholding the highest standards of service and responsible gaming. We look forward to working closely with BCLB and all other stakeholders,” Karauri said.
“We are excited to explore a wide range of partnerships in Kenya over the coming weeks and months, which will prioritise the development of sports in communities across our great country,” he added.
SportPesa will now join at least 10 other companies which are currently operating in the country. They include Betway, Mozzart Bet, Odi Bets, Eastleigh Bet, Lucky to you, Ken bookmakers, Bet boss, Kick off, Easi bet and Palms bet.
SportPesa has footprints in Tanzania, South Africa, Italy, Ireland, the Isle of Man and the United Kingdom.
Charles Rapulu Udoh
Charles Rapulu Udoh is a Lagos-based lawyer who has advised startups across Africa on issues such as startup funding (Venture Capital, Debt financing, private equity, angel investing etc), taxation, strategies, etc. He also has special focus on the protection of business or brands’ intellectual property rights ( such as trademark, patent or design) across Africa and other foreign jurisdictions.
He is well versed on issues of ESG (sustainability), media and entertainment law, corporate finance and governance.
He is also an award-winning writer