Sportpesa and Betika Shut Down Operations in Kenya

7.10.2019, 14:24

The decision by the Kenyan legislature to implement a 20% excise duty on all betting stakes is one that is about to cost Kenya a lot. This is following the announcement by Sportpesa and Betika to halt their operations within the country in protest over the taxation.

Over the weekend, the two companies which control over 60% of the Kenyan betting market collectively, announced they would be shutting down as the implementation of the excise duty had created a hostile business environment. They are adamant about resuming operations until the government changes its stand over the imposed tax.

Previous Bookmaker License Suspension

It is barely three months since the licenses of 27 betting firms were suspended, Betika and Sportpesa among them. This suspension was due to claims by the tax body in Kenya (Kenya Revenue Authority) over hundreds of millions of dollars’ worth of taxes unpaid by these betting firms. The suspension also saw their digital payment processing channels shut down, rendering them unable to carry out business.

Sportpesa had earlier indicated it was preparing to relaunch its operations in the market after reaching an amicable agreement with the taxman. The firm then came to learn that the Betting Control and Licensing Body i.e., BCLB wanted it to reapply for a gaming license. Firm’s execs felt this was competition on an unfair ground as Betway, their rival, wasn’t presented with this condition but rather had its license reinstated in August after meeting the requirements.

The bettors’ original stake is prone to taxation as the taxman holds that the tax applies to all money returned to bettors. On the other hand, the operators feel that the tax should only apply to actual winnings.

SportPesa and Betika Statements

In a statement, Sportpesa announced that the tax is based on a misunderstanding by the treasury about how revenue generation operates in the bookmaker industry. According to the firm, the decision will have a “damaging effect on both customers and the treasury “. It is in this statement that the firm announced its halting of operations until adequate taxation and a conducive betting business environment returns.

Betika, on the other hand, released a notice of termination of employment services to its Kenyan employees, effective from 31st October. This notice from the firm, which has not been operational since July, is on the grounds of deteriorating profits. The shutdown of the two firms render over 2500 Kenyans jobless. Further, this decision is bound to place a massive blow to local football which has been heavily dependent on betting companies. Local clubs such as Gor Mahia and AFC Leopards could not hide their disappointment following the decision by their prime sponsors.