Kenya: The Eye Cannot See What the Hand Doesn’t Hold
In Kenya, East Africa’s premier betting market, it’s not so much a U-turn as an S-bend. And the only certainty, it seems, is uncertainty.
President Uhuru Kenyatta had only just signed a new 2020 budget–with a provision to drop a 20 per cent betting levy–when Treasury Secretary Ukur Yatani, almost immediately announced that the tax will be reintroduced within six months.
Kenya’s gaming taxes have been shaded by controversy and inconsistency for some time now.
In 2019 local betting operators SportPesa and Betin pulled out of the market over multiple gaming tax disputes and claims for back taxes.
As a consequence, government tax revenues were severely impacted and many players moved their action to offshore sites.
And that’s why at first legislators decided to dump the betting tax.
But now it’s back.
“Betting activities in the country have adversely affected the social fabric of our society, particularly the youth,” explained Mr. secretary Yatani.
“In this regard, we wish to reiterate the commitment of the government on taxation of this industry so as to contain such vices.”
As well as introducing the 20 per cent levy on stakes, in 2018 the government mandated a 15 per cent revenue tax for operators and a 20 per cent tax on winnings.
In President Kenyatta, Kenyan punters cannot claim a friend.
He has previously called for a total ban on gambling in the nation.
And been reported as saying: “We have this thing called gambling and it’s so bad. I alone can’t finish it. Go change the constitution.”
In November last year rumours surfaced that the government was planning to replace the country’s private betting industry with a state-run national lottery.
It has also been reported that SportPesa is in advanced discussions with the government over a possible return to the marketplace.
The company has been locked in disagreement with the government for almost a year now.
In August 2019 they cancelled all sports sponsorship agreements in the country in an explosive dispute over the aforementioned 20 per cent tax on winnings.
The government said gaming companies should pay the tax, not punters.
And this interpretation left SportPesa with a KES60.56bn tax bill (US$586.4-million).
A subsequent court ruling found in favour of SportPesa and determined that the bettor and not the operator should pay the tax on winnings.
A victory for SportPesa then.
Their Chief Executive Ronald Karauri called the ruling a “significant development” and said the company would “reconsider” its future operations in Kenya.
Betting action through SportPesa remains dormant, however.
Last month (June), in another major move on the Kenyan gambling scene, Betsafe, a gambling operator owned by big-hitters Betsson, stepped up to the plate and boldly announced that it had agreed sponsorship deals with Nairobi football teams Gor Mahia and AFC Leopards.
Both teams, otherwise fierce sporting rivals, have previously been sponsored by SportPesa.
Amid the uncertainty, it’s game-on East Africa.
Betsafe’s opening gambit undoubtedly heralds a new and challenging chapter in Kenya’s gambling scene.
Next move, SportPesa’s.