The legal tax dispute between SportPesa, the main sports betting operator in Kenya and the government of that country, promises to get sour in the coming weeks, as a prolonged battle is expected. The mobile payment of the operator and other activities in the country’s gaming market were suspended.
SportPesa accuses the Kenyan government of politicizing the legal dispute to interfere with the gaming operations it has in the country. The operator has had to cancel all sports sponsorship contracts and pay a license to their staff until the dispute is resolved, even if he has not been able to process mobile payments.
The sports betting operator had to leave the Premier League of Kenya after the fiscal scandal, while the Kenyan government requires the company to pay millions in back taxes. A situation that is repeated after a similar scandal in January 2018.
The Betting and Licensing Control Board (BCLB), the Kenyan gaming regulator, reported on July 1 that it would not renew the gaming licenses to SportPensa and 26 other companies. BCLB notes that these companies owe a total of KES60.56bn in taxes not paid to the Treasury (£ 483.7m / $ 586.4m / € 528.1m).
It claims that according to the Gaming Bill of Kenya, the 20% tax applies to winnings and the original gambler alike. However, a SportPesa spokesman said BCLB is in error, as the company fully complies with the law.
“The intervention of BCLB and the Ministry of Interior took place in the context of broader fiscal disputes between the Kenyan Revenue Authority and BCLB and industry, which are largely based on the authorities’ misunderstanding on how the revenue generation in the sector, “said the spokesman.
He said that SportPesa strictly complies with the payment of taxes in all markets where it operates. “We have been recognized by the KRA as such, receiving tax compliance awards in 2016, 2017 and 2018.”
“The dispute between the industry and the Kenyan authorities is the result of a deliberate politicization of tax figures, supporting the political agenda of the Kenyan government itself,” he said.
“the government erroneously stated that the entire betting sector only paid KES4 billion (£ 31.9m / € 34.9m / $ 38.7m) in taxes last year. SportPesa only paid KES6.4 billion in taxes.”
He said that an order of the High Court annulled the claims of the regulator, preventing payment services and other activities from being suspended. However, on July 10, the government ordered the telecommunications company Safaricom to block banking services to the 27 companies.
The measure prevented customers of these companies from depositing funds. In SportPesa’s opinion, the order constitutes an open violation of the court order. Therefore, SportPesa took legal action against the regulator with the intention that the blocking order be revoked.
According to the SportPesa spokesman “in instigating this blockade, the BCLB and the Ministry of Interior directly ignored an order from the High Court of Kenya not to interfere in our business.” SportPesa seeks to be compensated for the losses caused by the regulator, considering that the measure is illegal and expects a verdict to take place on September 19.
On August 9, the company announced the suspension of all sports sponsorships in the country, including the Kenyan Premier League and the boxer Fatuma Zarika. However, he clarified that sponsorships outside of Kenya, such as that of the English Premier League Everton club, will not be affected.
SportPesa sent on vacation with paid expenses to its 453 employees in Kenya, but before it had already suspended sponsorship agreements in the country in 2018, after the imposition of a 35% tax (then reduced to 15%), which is demanding the Kenyan government In addition, he informed that “all clubs and local members received notices of this cancellation, as provided in their contracts.”