Two big-name operators close shop
Two of the biggest sports betting operators in Kenya are closing their operations in the country. The hugely popular Betin and SportPesa brands will be exiting the market following a prolonged stand-off with the government regarding taxes.
a prolonged stand-off with the government regarding taxes
The decision was taken despite both companies recently obtaining permission from the authorities to resume their sports betting offering. This happened after the operators had their Kenya licenses suspended for a number of months.
SportPesa moving on
SportPesa is leaving the Kenya market for now, but it does not rule out returning to it in the future.
The operator has said it would start serving the Kenya market once more if the country changes its approach to the sector and introduces “adequate taxation and [a] non-hostile regulatory environment.”
Taxation issues in sports betting
The Kenyan government currently charges 20% tax on all sports bets made, which has a significant effect on the operators, customers, and the government.
SportPesa has claimed this tax is “based on a fundamental misunderstanding” by the government on how the sports betting sector generates revenue. The company argues that more tax revenue could be generated through a lower tax rate.
Trouble down the line
SportPesa believes the country will suffer “severe consequences” if it continues in its current vein. In a statement, the company explained that the tax framework in operation “will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya.”
The gambling industry in Kenya was generating revenues of up to $2bn before all the trouble began.
Betin cuts its losses
Betin has been more extreme in exiting the Kenyan market: it has fired all of its employees in the country. The reasons for this move were heavy taxation, frustration with the authorities, and the failure of the government to renew the company’s operating license. Betit had been negotiating with the government to try and avoid this eventuality, but efforts proved fruitless.
A memo from Betin’s Kenya managing director said “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.”
After having its license suspended in July, the company outlined that it could only sustain its employees for just three more months. All workers will be made redundant on October 31.
Local sports suffering
SportPesa has been the official sponsor for the Kenyan Premier League. It was also the official partner for multiple clubs in the country, such as the AFC Leopards and Gor Mahia. The operator is also the main sponsor for English Premier League team, Everton FC.
local soccer will lose about $5.8m worth of sponsorship money
With SportPesa leaving the Kenyan market, local soccer will lose about $5.8m worth of sponsorship money. The president of the Football Kenya Federation, Nick Mwendwa, said they now rely on “the Kenyan government for help because we don’t have any other solution.”
Stand-off with the government
The stand-off between the Kenyan authorities and the sports betting operators came after the Kenya Revenue Authority (KRA) said it was owed more than $257m from 27 licensed bookmakers.
Of these operators, SportPesa was said to owe more than half of the sum. The KRA threatened in May that if the operators didn’t pay by July 1, they would be shut down.
This led to legal action which resulted in the closure of most of the operations. Kenya’s president was even in favor of completely banning gambling in the country.