Everton FC’s main sponsor, SportPesa has paused operations in Kenya citing a recent tax hike on betting stakes. The esteemed company, which had its betting licence revoked in July due to unpaid taxes, is one of Kenya’s largest gambling firms. Rival firm Betin will also be shutting down its operations in protest.
The two betting operators control more than three-fifths of Kenya’s betting market. Yet, both claim the new gambling levy will render their operations commercially unviable. According to the Kenya Revenue Authority (KRA), SportPesa and Betin owe hundreds of millions of dollars in unpaid taxes. This led to the KRA suspending their gambling licenses back in July along with 27 operators.
Sports-betting is massive in Kenya thanks to faster internet connections, cheaper mobile phones and the popularity of the English Premier League. According to government figures, the industry generated around $2 billion in 2018 alone.
However, concerns are increasing within the East African country about the damaging effects of gambling on both adults and children. One government minister recently dubbed the gambling industry a ‘curse on youth’.
In an effort to address the problem, regulations were unveiled in June that included a ban on outdoor advertising as well as social media betting promotions. Parliament has now voted to double the excise duty on bets to 20%.
The news was not welcomed by SportPesa which announced that it would halt operations until a ‘non-hostile regulatory environment’ was restored. The multi-billion dollar company then deactivated its website and stated:
“This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya. Until such time that adequate taxation and (a) non-hostile regulatory environment is returned, the SportPesa brand will halt operations in Kenya.”
SportPesa was launched by a group of Bulgarian businessman and enjoys high-profile partnerships with premier league clubs such as Arsenal, Southampton and Hull City.
Citing a ‘deterioration of the profitability’, Betin also informed its entire Kenyan workforce that they would be made redundant as of October 31. In an effort to provide staff with clear and transparent information about their sackings, the company explained that:
“…the management has had to rethink its operational model and to proceed with the exercise of termination on account of redundancy.”
An estimated 2500 Kenyans will lose their jobs as a result of the recent shutdowns by both betting companies. However, the KRA is considering taking legal action against Betin’s directors, which it claims owes almost $30 million in unpaid taxes.