INTRODUCTION OF 35 PER CENT ‘GAMING TAX’ HITS BETTING INDUSTRY
Kenya’s largest betting firm SportPesa has cancelled all local sports sponsorship worth an estimated Sh600-750 million per year with immediate effect following the imposition of a 35 per cent gaming tax on gross earnings for all betting firms in Kenya.
SportPesa had applied to the High Court to stop the government implementing the new tax law passed by parliament but the court ruled against them.
SportPesa CEO Ronald Karauri
In a press statement, Sportpesa CEO Ronald Karauri said: “Our attempts to have the imposition of 35 per cent tax reversed by the government has been unsuccessful. As earlier informed, please note that all contracts between us shall stand terminated on December 31, 2017.”
FOOTBALL AND RUGBY IN KENYA WILL BE HARD HIT
This move by the local betting giant affected the Kenya Premier League, football clubs Gor Mahia and AFC Leopard, Kenya Rugby Union and the Football Kenya Federation.
Sports betting became popular in Kenya from 2014, with football attracting the largest share of the gambling stakes. Sports’ betting has now become so rampant that betting is Kenya’s biggest industry, raking in billions of shillings annually. This has as a result caused the mushrooming of betting firms with almost over 40 now operating in Kenya.
Sports’ betting in Kenya caught the attention of the legislators who passed a bill proposing heavy fines and stringent measures on the gaming industry in a bid to contain the widespread gaming machines in towns and estates across the country.
In the last four years, the industry has been the fastest growing area for tax revenues, multiplying 39 times from Sh120 million in 2014, to Sh4.7 billion last year. With the new gaming tax this number could triple going by the new tax laws, or it could kill the goose that lays the golden egg. Betting firms already pay 30 per corporate tax and dedicate 25 per cent of their revenue to social causes.
SPORTPESA FIRST TO SPONSOR EPL
Sportpesa became Kenya’s most successful betting company making billions of shillings in revenue to the point of making history by becoming the first Kenyan company to sponsor English Premier League clubs such as Hull City, Southampton and recently Everton FC.
“Perhaps we invited this on ourselves by sponsoring teams. We should just have sponsored one game and kept our heads low,” Gerasim Nikolov, SportPesa Global Chief Executive Officer said.
Nikolov, who says the firm is being targeted, argues that the new tax will automatically throw them into the red.
“The gaming industry is still subject to other additional statutory taxes such as withholding tax and PAYE,” Mr Karauri, who also chairs the Association of Gaming Operators of Kenya (AGOK), said.
The new gaming tax takes Kenya among the top 10 highest in betting tax rates in the world.