Sports betting giants of Kenya, SportPesa, and Betin have agreed to shut down their local operations in Kenya. The decision came after the Kenyan Authorities insisted on imposing a 20% tax on the betting stakes including the original stakes. Both of the companies control almost 60% of the betting business in Kenya collectively. However, considering the decision of the Kenyan Revenue Authority (KRA) unfavorable for local businesses, both have shut down their operations.
The interesting development came after KRA named 27 companies and suspended their gaming licenses for unpaid taxes in July. SportPesa and Betin were part of that list. KRA argued that millions of dollars are unpaid in taxes for these companies. The digital payment processing channels were also shut down, leaving every business standstill.
SportPesa reportedly brokered a deal with KRA earlier this month and was all set to relaunch the operation. However, it is now learned that Betting Control and License Board (BCLB), wanted to SportPesa to reapply for the gaming license instead of resuming the operation. However, Betway which is one of the biggest rivals of SportPesa did not have this clause from BCLB. It is understood that Betway has agreed with the 20% tax regime on the betting stakes.
There is a huge debate on the 20% tax definition as of now. As per the operators, when the tax on winning is said, it should be the actual winning of the punter. However, the KRA wants it to be the entire winning or all money returned to the bettors including the original stakes. The SportPesa has refused to bow down to the hostile tax policy and said that unless an un-hostile policy is returned, the operations would be shut down. The company also added that the government is trying to create confusion and misunderstanding about the revenue generation in the bookmaker industry and this would harm both the treasury and the customers.
SportPesa has already announced the unemployment of all the employees associated with it in the local market. It is expected that 2500 Kenyan would lose jobs next month due to the twin shutdown. However, the KRA is determined about the decision and said that legal actions would be initiated against the companies. The KRA already announced that SportPesa has an outstanding amount of Ksh 23b around $210m and Betin has Ksh 3b around $28.9m. The KRA is also seeking legal action against Betin who is reluctant to clear the arrears.
Githii Mburu, KRA Commissioner said that the decision of providing the gaming license to SportPesa is up to BCLB. However, Ronald Karauri, CEO of SportPesa clarified that the tactics of government would give no result. Instead, he added, that the customers would move towards internationally licensed gaming operators that can offer higher payouts on the bets.