Some sports betting operators in Kenya are feeling persecuted by the government. This is the case of the local operator Betika to whom the government kept an eye on an alleged non-payment of taxes.
The Kenya Revenue Authority (KRA) requires Betika to pay Sh1.75b (US $ 17m) in betting fees that would not have been paid in the semester ending February 28, 2019, Business Daily Africa reported. In the amount requested by the KRA, fines and interest for late taxes are included.
The gaming authority asked the local banks, Guaranty Trust Bank Kenya and KCB Bank Kenya, where Betika is a client, to force them to make a section of the amount that the operator supposedly owes the state. Betika, Shop & Deliver, the parent company, appealed to the Court of Tax Appeals with the intention of blocking KRA’s claim on the company’s funds.
The operator had not been included among the 27 betting operators whose respective gaming licenses were suspended on July 1, following the KRA claims of a millionaire sum of money in unpaid taxes. Although Betika was one of the first sports betting operators that began deducting the controversial 20% tax imposed by the government on betting rotation.
In its tax appeal, Betika highlighted the operating risk that it generates for the company to continue operating under the threat that the government can withdraw cash from the company’s bank accounts. After the closure of several local betting operators, after being accused by the KRA of not paying taxes, market alarms have been turned on.
In September SportPesa, one of the largest operators in Kenya, had to abandon its local operations due to tax arrears claimed by the gaming authority. That same month also Betin, another strong operator in the country, decided to close its operations for the same reason.
Operators that have ceased operations such as SportPesa and Betin have been holding meetings and negotiations with their employees to agree on appropriate terms of cessation. Sportpesa accused the Kenyan government of “deliberately politicizing” the allegedly unpaid tax figures.
Betika, however, had kept out of fiscal disputes with the government. Even in October, it launched a social program called Betnika na Community, to which it would allocate several million shillings in order to finance local sports and educational programs.
It also renewed their sports sponsorship to Sofapaka, the Kenyan Premier League team, at a time when other operators such as SportPesa announced the withdrawal of their sponsorships to soccer teams in the country.
Despite the heavy environment generated by the repression of bets in Kenya, last week there was good news for the industry. Safaricom, the local telecom operator, announced the M-Pesa mobile money transfer service, which was expected to help improve operators’ revenues, after the payment processing rights were suspended from the operators.
In the H1 tax card delivered by Safaricom last week, it was evidenced that the company’s M-Pesa unit had an annual growth of 18.2% during the semester that ended on September 30. Fortunately, non-game related revenues have grown by almost 21%, due to the fact that M-Pesa added 2.6 million active customers during the period.