1 July 2020 marked the day that President Uhuru Kenyatta of Kenya signed the new Finance Bill into law. It takes the 20% levy on sportsbook stakes that led to Betin and SportPesa exiting the market in 2019.
The tax had been part of previous years’ budgets and increased from 10% to 20% in September last year. The two biggest operators in the country, Betin and SportPesa, who were already involved in disputes over charges with local authorities, cancelled their services as a result.
Although the duty remained in the early version of the Bill for 2020, the Finance and National Planning Committee for the National Assembly voted to remove it. This amendment was made after talks were held with Shade.co.ke, the mobile payment provider, which called for the removal of the levy.
The Committee reported that the reason for the removal of the tax was that it had forced bettors to start wagering on foreign platforms. These do not pay any kind of governmental tariff and this significant revenue source has been sorely missed, says Finance Committee Chair Joseph Kimo.
After the revision was approved by the National Assembly, the Finance Bill passed, and it made its way to Kenyatta’s desk. But there were still no guarantees at this point, as President Kenyatta has maintained his opposition to the betting industry as a whole thus far.
In August 2019, President Kenyatta saw a total ban on gambling in Kenya being passed. He also let it be known that he expected sportsbooks to be held 100% liable for any tariffs owed to the authorities.
The Building Bridges Initiatives Report outlining possible alterations to the Kenyan constitution was published in November 2019. It suggests that the private wagering sector should be replaced with a National Lottery run by the state.
This proposal has evidently been found wanting, however, since Kenyatta chose to sign the new Finance Bill as it was passed in Parliament.
What’s Next for KEnya?
SportPesa declined to comment on the Bill’s passing or of its plans to re-enter the market. Sources do indicate that the operator has been negotiating with the government about their return for some time now, however. Thanks to this last development, one of the major obstacles to their doing so has been removed.
The company cancelled all its sports sponsorship deals in August 2019. This was in the wake of Kenyan authorities ordering telecoms firms to block payments to SportPesa in light of an issue over the 20% winnings levy. The government took this law to mean that the tariff included bets, an interpretation which saw the organisation in KES60.56 billion debt. In response, SportPesa threatened legal action against the Betting Control and Licensing Board and the National Revenue Authority.
A court ruling in November 2019, however, decided that SportPesa’s interpretation, that the tax applies only to player winnings and not the stake, was correct. They further decided that the levy would be paid by bettors rather than the bookmaker, too. Chief Executive Officer for the sportsbook Ronald Karauri called the ruling a significant one and said that it might be possible for them to return. But although there have been some minor changes evident at the Kenyan website for SportPesa, no bets are currently being taken.
In June 2020, Betsafe, owned by Betsson, agreed to two new sponsorships in Kenya. Extending to rivals Gor Mahia and AFC Leopards, both Nairobi-based, the two teams previously enjoyed the operator’s patronage. A full-scale return to the market will probably happen in the next few months.