Over the past few years, Kenya’s betting industry has seen tremendous growth, especially with the advent of new technologies and innovations that enable easy participation. In fact, leaked stats revealed that punters spent a staggering $300 Million in a single month in 2019. If this was the monthly average, punters would have spent almost US$3.5 billion during that year.
However, betting firms have dealt a major blow following the suspension of operations over tax compliance in the second half of 2019 by the Kenyan Government. This led to some of the leading betting firms in the country, such as Betin and SportPesa closing shop, as they struggled to obtain new licenses.
After the license SportPesa fired over 400 employees and Betin sent home all its employees. This also meant all the clubs sponsorships were halted affecting the Kenya Premier League.
With the big firms out of the scene, smaller ones that remained operational like Betika and Odi Bets moved in quickly and took over the market. Most punters, however, were frustrated and complained about the high taxation on stake. This led most of the gamblers placing their bets on foreign sites like 22Bet not subject to tax, in turn, denying the government revenue.
In a bid to mitigate the betting craze in the country, the Government has also suffered a massive blow with the sudden loss of revenue. Members of Parliament in the Finance committee steered the removal of the controversial excise tax after an undisclosed group said, “It has made many betting firms cash-strapped, hence cutting down on their sponsorships to local sports clubs.”
Barely a week after the tax removal, the Government is considering the reintroduction of the 20% tax on betting stakes within the next six months.
In a statement by Ukur Yatani, the Treasury Cabinet Secretary claims that the tax removal happened during the committee stage of the bill, which was against the Government’s commitment to dealing with the social vices associated with betting activities.
This suggests that betting sites in Kenya have only six months to enjoy reduced taxes since the law only allows the reintroduction of a bill after the said period. Other East African countries that have imposed restrictions on operations and licensing of betting firms include Rwanda and Uganda.
Is SportPesa back? Unfortunately, the company is not yet licensed. However, the company promised its fans that they are still pushing for their comeback as there are ongoing discussions with regulators, stakeholders, and the Government. The betting giant is confident that they’ll soon be cleared by the BCLB and resume full operations. This is according to their CEO.
Despite the efforts by betting firms to repeal the imposed excise tax, passing of the Building Bridges Initiative report will make all the progress obsolete. The BBI recommends replacing private betting firms with a government-operated entity to promote responsible gambling. Also, the proceeds will be directed to activities that elevate the youth, sports, plus other social activities beneficial to Kenyans.
This is if the BBI proposals will be adopted.