Government cracking down
The Kenyan government is clearing funds from online bookmaker accounts within 48 hours, as part of an ongoing dispute that is causing waves across the country for operators and bettors alike.
The government has told national telecom operators to inform their clients that they need to quickly take all of their funds out of their online betting accounts. All mobile wallets and any shortcode payments processes will be shut down by the telecom operators, eliminating customer-to-bookmaker engagements.
The order came from Liti Wambua, director of the Kenyan Betting Control and Licensing Board. According to local news reports,
People have 48 hours to withdraw these funds before they are all cleared out by the government.
This move comes after 27 licensed bookmakers were suspended last week because of a stand-off over taxes. The operators allegedly owe the Kenya Revenue Authority (KRA) tens of millions’ worth of industry taxes. The authorities will continue to clamp down hard on the sector until this money has been paid.
The total sum owed is about $257m (£206.7m), with SportPesa accounting for more than half of this sum. In May, the authorities gave operators until July 1 to pay these taxes or face a shutdown.
Some of the operators whose licenses have been suspended are Mozzartbet, Betboss, Atari Gaming, 1xBet, Premierbet, betPawa, Betway, and SportPesa.
The main telecom company in the country, Safaricom, has asked the government to change its approach to the problem. The company says that over 12 million of its customers will be affected by the shutdown.
Some of the largest bookmakers in the country, such as betPawa, Betin, and SportPesa, say the move is not legal. They are now launching a counterclaim against the Kenyan Betting Control and Licensing Board, asserting that the government cannot legally make payment demands while orders are still under protest.
The authorities are on high alert for operators attempting to avoid paying taxes.
They are reportedly telling the national banks to freeze the corporate accounts of these companies. 17 betting firm directors have been deported by the authorities due to visa work permit violations.
The announcement came via a simple statement by the interior ministry’s head of communications. She said: “The cabinet secretary (minister) signed 17 deportation orders for directors of betting companies.” She did not make any further comments.
SportPesa fighting back
SportPesa does not plan to make any sort of payment to the KRA in relation to this issue. A judgment from a Nairobi High Court says that the company can exclude a player’s taxes after a consumer dispute.
The company has started a PR campaign to rebut the allegations that it is not tax-compliant. It is also denying that they prey on vulnerable customers. SportPesa is taking out ads in newspapers and other media channels showcasing its efforts in support of local community programs.
SportPesa also notes that as many as 600 workers risk losing their job if this issue continues. Other operators, a lot of whom largely employ young Kenyans, might also have to lay off workers. Youth unemployment in the country is very high.
Gambling history in Kenya
Nearly 30 casinos operate in the country, along with bookmaker operators and bingo halls. The state has a monopoly on the poker, bingo, and lottery sectors. A ban on gambling ads was scheduled to be imposed this year, but it has been suspended for the time being.