SportPesa against Kenyan tax raise

After a recent tax increase on gambling revenue in the country, SportsPesa has announced the cancellation of its sponsorship of sports bodies in Kenya.

Kenya.- A boost in gambling revenue taxes in Kenya has turned local sports betting operator SportsPesa to announce the cancellation of its sponsorship of local sports bodies. CEO Ronald Karauri announced through his Twitter account that “from January 1 we [the company] will withdraw all sponsorships.”

As CalvinAyre reported, the date corresponds to the start date of the new gambling tax regime, which became a reality last week when President Uhuru Kenyatta signed the Finance Bill 2017 into law and imposed a uniform 35 percent tax on all gambling revenue. That means that SportPesa, which had previously paid 7.5 percent tax, will have to pay about 4 times the amount it used to until now. According to Kaurari, that makes funding the sports sector “impossible”.

SportPesa’s sponsorship of local sports is worth an estimated US$9.6 million and includes the Kenyan Premier League and individual deals with KPL clubs Gor Hamia and AFC Leopards. The company is also tied with the Football Kenya Federation, Kenyan Rugby Union, Kenya Boxing Federation and the Nakuru All-Stars team. If other operators follow its lead, local sports bodies’ finances could be severely harmed.

Kaurari happens to also be the chairman of the Association of Gaming Operators-Kenya (AGOK), which represents the country’s licensed betting, casino, lottery and competition operators. The announcement of SportPesa’s decision was made just after an AGOK meeting.

According to President Kenyatta, the tax raise will prevent the Kenyan youth from gambling excessively, which is currently a major issue in the country that has the highest rate of youth gambling participation in Africa according to a GeoPoll survey.

However, Kaurari says that the AGOK “believes the president was ill advised that a tax of this nature will achieve the desired results.” He also said that Kaurari said the tax hike would cause many licensed operators to shut down their operations, which would favour unauthorised operators that pay no taxes. SportPesa’s CEO explained that “there is no business that can sustain taxation at 35% of gross profit and thereafter 30% corporate tax [to which operators are already subject to].”