Kanya’s Clamp Down on Betting Companies Comes at a Great Cost

Kenya’s authorities seem determined to eradicate the betting industry in the country, which is seen as a source of betting addiction among young bettors in particular. The tough regulation and the recently introduced 20% tax on all bets, which forced the two largest betting operators to withdraw from the country, however, comes at a great cost. After SportPesa and Betin shut down their business in Kenya, the effects on various sectors are starting to become evident.

SportPesa, the largest bookmaker and main sponsor of major sports leagues in the country, withdraw from the Kenyan market on September 28. Betin, another huge sponsor and sports betting site, also halted operations following licensing and taxation issues. According to experts and early estimates, the exit of the two companies would have a crippling effect on the Kenyan sports sector, which, until recently, relied heavily on sponsorship deals with the bookmakers.

Operated by Pevans East Africa, SportPesa began operations in the African country in 2014. The company’s shareholders are mostly Kenyans who are backed by Bulgarian and US-based investors. Within 5 years, it became the dominant sports betting operator in East Africa and started expanding globally. Now, the bookmaker is the main jersey sponsor of English Premier League club Everton, as well as the sponsor of Formula 1 motor-sport team Racing Point. It also has partnerships with several other English football clubs, namely Hull City, Arsenal, and Southampton.

In 2015, the company signed a deal with the Kenyan Premier League for naming rights and since then, the national league was also known as the SportPesa Premier League. For its huge investment in various sports and leagues in Kenya, SportPesa has also earned several awards, including Best African Sponsorship Award at the Discovery Sports Industry Awards (DSIA) 2016. In 2017, it was ranked the 13th best company in Kenya.

Betin Kenya, on the other hand, offered a comprehensive online betting and gambling platform, while unlike most bookmakers in the country, it offered wagering on a wide range of sports. It was owned by the GoldBet Group and the Italian millionaires Leandro Giovando and Domenico Giovando. They are now facing criminal charges for failing to pay Sh3 billion in taxes. Moreover, Betin and SportPesa were among the 27 betting companies whose licenses were revoked earlier this year.

SportPesa received clearance from the Kenya Revenue Authority and was allowed to apply for a new license in the country. Following the introduction of the 20% excise duty on all bets in August, however,the operator decided to shut down operations altogether.

Withdrawal from the Market Cripples the Sports Sector

Apparently, the two bookmakers had a major role in financing the sports sector in Kenya. SportPesa, in particular, was the largest sponsor of sports events and major leagues and more importantly, it was the sole investor and sponsor of multiple local soccer teams and athletes. The bookmaker was the main sponsor of the legendary Gor Mahia Football Club, which has won the Kenyan Premier League a record 18 times, as well as the second-best team in the league, A.F.C. Leopards.

SportPesa was the sole sponsor of Kenyan boxer Fatuma Zarika, who, after losing the World Boxing Council’s Bantamweight title to 21-year-old Mexican Yamileth Mercado last month, claimed she had been “abandoned” by everyone. According to her, after SportPesa left the country, the Kenyan Government did not support her in any way.

Furthermore, the closing down of Betin and SportPesa operations led to job losses across the country. Betin closed down all shops, firing all their staff. SportPesa also laid down around 400 employees, admitting it could no longer afford to pay their salaries. It total, approximately 2,500 people, most of them Kenyan citizens, lost their jobs as a direct result of Betin and SportPesa’s exit from the country. This included not only the employees of the two companies but also a large network of commission-earning agents working all over Kenya.

There will be secondary effects, however, experts warn. They will become prominent in 2020 when sports leagues, soccer teams, and athletes will start looking for funding. The Government is not expected to offer support, while the regulation of the betting industry is getting tougher and more bookmakers are considering an exit from the country altogether.