Kenya Tax Authority: Betting Operators in $586 Million Debt

5.08.2019, 17:06

Kenya Revenue Authority (KRA) on Wednesday made a sensational claim about the debt betting firms have accumulated. The taxman through its deputy commissioner Elizabeth Meyo was speaking to a Senate select committee on Justice, Legal, and Human Rights. She told the committee that KRA is seeking to collect about $586 million debt that betting operators have accumulated.

KRA stated that 72 betting firms with the licenses from the Betting Control and Licensing Board (BCLB) owe the nation the staggering amount. Meanwhile, the government had already suspended 27 betting operators earlier in July over the issue.

In May, Interior Cabinet Secretary Fred Matiang’i has said that the gambling industry owes Kenyan government Ksh.26 billion. The taxman varying claim from what the executive had said put the betting operators into further confusion. The gambling firms are now torn in the middle over the authority that’s giving the accurate figures.

In 2016, the law that mandated the betting regulator to collect 20% of the bettors’ winning was suspended. However, it didn’t take long with the legislation being reintroduced later. Gambling firms, including the giant Sportpesa, have argued that legal challenges from the gamers are a massive constraint for collecting the tax. In another twist, Sportpesa, together with other operators, has mounted a challenge seeking to frustrate KRA’s effort to obtain the controversial arrears.

KRA deputy boss claims that the misinterpretation of the new gambling laws took effect last year was the cause of the dispute. The previous law required that the operators submit 20% of the winning together with the amount staked. The current amendment to the law only targets the won amount.

Meyo reminded the legislators of KRA’s mandate to collect taxes from everyone, including the betting industry. She further said that the authority doesn’t want to be crybabies who would come back and tell the parliament that the operators have “refused to comply.” She reiterated that most operators have reached out and agreed with KRA on “acceptable payment” plans. She remains upbeat that other remaining firms will follow suit.

Pushback from Kenya Betting Market

During the hearing, Sportpesa CEO Ronald Karauri told the discussion to stop KRA from “abusing power to intimidate” the industry. The CEO requested the hearing to allow them to return to operation and negotiate while the business is running.

In mid-July, Sportpesa, along with other betting firms, had their digital money processing disabled. 27 companies were thrown under the bus, including the biggest market players, such as SportPesa and 1xbet. Nevertheless, relatively new brands such as 22BET Kenya remained operational. The betting operators unanimously feel that the move was illegal as the court had ruled in favor of them.

Samson Cheragei, the committee chair, warned that the government officials’ habit of treating court orders with contempt would create the precedence of law abuse in the country. The angered committee has now summoned the Interior Cabinet Secretary and the summit of the betting regulator in the hearing.