A leak has shown how much Kenyans bet in May 2019, before stricter regulations. The challenge now is to balance tax benefits with gambling controls.
Kenya’s sports betting industry has been growing exponentially since 2010. This has generated important tax revenue and jobs but has also created some serious gambling problems. Now, figures obtained by UK firm Finance Uncovered, and leaked by an insider at the country’s Betting Control and Licensing Board (BCLB), for May 2019 show just how much Kenyan citizens are staking.
Cautious Interpretation
The BCLB is known for being tight-lipped with regards to publicly releasing gambling figures, so people are especially interested in this snapshot of the nation’s gambling over a month-long period. However, experts do caution that the numbers should be interpreted carefully. The data were not accessed in real time, which means that all firms might have under-declared their self-reported profits.
In addition, true profitability is hard to discern when only the total amount and value of bets placed is known, rather than also having details on taxes and operating costs. The actual situation is further obscured by the fact that certain operators hold related companies in other countries, where little to no information is made public on how much they derive from their Kenyan customers.
However, certain estimations can be made. Online betting dominates the Kenyan gambling market and returns around 90% of wagers to punters as winning. Retail outlets, by contrast, return about 85%. Gross Gambling Revenue in May 2019 is presumed, therefore, to have been between Sh3 million and Sh4.5 million. This would be Sh36 billion and Sh54 billion per year.
Top 5 Operators
The figures from May 2019 are particularly significant in that they were the last earnings before the stricter revised Gaming Bill came into effect at the end of that month. This placed considerably higher tax demands on bookmakers. Information from almost 40 operators was leaked, and the top 5 earners were SportPesa, Betin, Betika, Betpawa and SportyBet. However, the picture has changed.
SportPesa and Betin declared almost Sh20 billion and almost Sh6 billion for May 2019 and accounted for 64% and 20% of the market share respectively, before being muted by the government’s crackdowns. Their fortunes changed when they were included in a group of 27 firms whose operating licences were withheld last year, due to alleged unpaid and back taxes.
Betika managed to retain its licence and is now Kenya’s biggest bookmaker, but it is also operating in a more curtailed capacity. Betpawa has since closed its doors, while SportyBet remains open. Betika appears to be the only one of the former top 5 with majority ownership within the country. The other brands did, however, generate considerable jobs which have now been lost along with tax revenue.
Local Industry Size is Staggering
The leaked figures (from a spreadsheet of sportsbooks’ revenue declarations to the BCLB) show that bettors staked over Sh30 billion, or 300 million US Dollars, in the month of May 2019. Extrapolation suggests that, had stricter governmental regulations not been imposed on the industry as they were, punters would have soon been spending more than Sh360 billion a year on sports bets.
Almost 180 million individual wagers were placed over the same month, meaning that the average amount bet on each stake was Sh170. Nelson Bwire, co-founder of the Gaming Awareness Society of Kenya, said that he was shocked at the numbers that the leak revealed. The Association was founded in 2015 and is dedicated to reducing the perceived harmful effects of gambling in Kenya.
Bwire commented that, as co-founder of the Association he was already well aware of the detrimental impact that sports betting can have, including addiction, depression, debt, increased crime and suicides and family breakups, but that he had no idea that the amounts of bets placed and money spent was so vast.
Though Bwire’s concerns on the potential dangers of gambling are valid, its positive impact on national economies and job markets should also not be ignored. Now, more than ever in the face of COVID-19, a regulated industry is essential. This would allow Kenya to reap the benefits while controlling for gambling problems at the same time.