SportPesa and Betin to Withdraw Operations from Kenya Following New 20% Excise Duty on All Bets and License Revocation

The two largest betting firms in Kenya are withdrawing from the country following an explicit war with the local Government on their gambling license renewals and some taxation issues. Both companies were among the gambling operators whose licenses were suspended by the competent authorities in July, after some revelations that they had not been presenting true reports about their earnings and paid considerably lower taxes than they actually had to.

In the weekend, SportPesa revealed that it had decided to stop providing its services in Kenya describing the country as a hostile operating environment. The gambling company further noted that the taxation regime which the Kenyan Government rolled out on the betting industry has stripped SportPesa’s operations in the country of their viability. Apart from the lawmakers’ “hostility”, SportPesa also cited the National Treasury as one of the main reasons for the decision to cease operations in Kenya. The gambling company did not explicitly reveal what the halting involved, but it could start dismissing employees soon.

The other gambling giant which has been operating in the local gambling sector, Betin Kenya, is dismissing all of its employees. The firm has not operated since July 2019, after the Kenyan Government refused to renew its license. On September 27th, an internal memo was issued by the company to inform its employees about the layoffs. According to the memo, the workers’ positions will be made redundant by the end of October. Betin Kenya also informed its employees that it had made an attempt to reorganize its operational model but that turned out to be impossible for the time being.

The two companies’ decision to stop operating in Kenya will affect thousands of direct and indirect jobs.

Kenyan Government Passes Finance Bill 2019 Which Contains 20% Excise Duty on All Staked Amount

Last week, the Finance Bill 2019 was passed by the Parliament. The piece of legislation has clauses under which a 20% excise duty on staked amounts is to be introduced in Kenya. The introduction of the new tax also appears as one of the reasons which had pushed the two betting operations to consider withdrawal from the country’s gambling sector.

At first, the National Treasury had made a proposal for a 10% excise duty but its rate was boosted to 20% by the National Assembly’s Committee on Finance and Planning, noting that the tax was meant to have the character of punishment and keep people away from betting.

SportPesa, however, said it was disappointed with the decision of the country’s legislature to double the proposed 10% excise duty to 20% and claimed that the tax is based on the Treasury’s serious misunderstanding on how revenue generation works in the betting sector. The company’s announcement for halting its operations in Kenya has so far been the strongest reaction to the stricter measures unveiled by the country’s Government. Back in August, the gambling operator has terminated its contracts as a sponsor in some football, boxing and rugby leagues.

SportPesa claims that the recently unveiled 20% excise duty on all staked amounts would have severe consequences for licensed gambling companies which strictly pay their taxes to the Kenyan Government. According to the firm, it would also prevent all investments in sports in Kenya.