Kenya’s government has made it clear that it’s ready to collect money from the gambling industry. Lawmakers are insisting that SportsPesa, the leading company offering online gambling in Kenya, owes hundreds of millions in back taxes. As a result, SportsPesa has officially stopped sponsoring local sports leagues.
There’s clearly a lot happening with this country’s gambling industry. Some fear that the government will announce a complete ban on internet gambling. Today, we’re looking at how SportsPesa is responding to the government crackdown.
It’s well-known that Kenya has one of the most lucrative gambling markets in Africa. Reports indicate that in 2018, more than 70% of young people in Kenya gambled. Unfortunately, the government has begun to set harsh new restrictions on the gaming industry.
Late last year, the Kenyan Revenue Authority (KRA) revealed a new bill that claimed SportsPesa owes $103 million in unpaid taxes. It states that these taxes represent 20% of gambling winnings that SportsPesa was required to withhold from customers. This obviously didn’t sit well with Kenya’s largest gambling operator.
Officials claim that legal issues in the Kenyan courts are making it impossible to pay these fees. They also claim that with Kenya’s new gambling legislation set in place last year, SportsPesa is facing a 20% tax on all betting turnover, much higher than most countries set on gambling companies. In May, the government claimed that SportsPesa had until July 1st to pay the fees before their gaming license was revoked.
That date has passed and now $147 is said to be owed to the government. This isn’t the only company the government is targeting. Kenya’s KRA suspended 27 gaming operators’ licenses last month, claiming they owe a combined $586 million in taxes. Some are now choosing to fight back.
Company officials have announced that they are officially stopping all sports sponsorships due to the “uncertainty of this situation” in Kenya. In the past, SportsPesa has secured sponsorship deals with the Kenya Premier League, and individual clubs including Gor Mahia and AFC Leopards. With a license suspension and millions owed in taxes, this company is choosing to remove itself from the public spotlight.
Earlier this week, SportsPesa and 1xBet, another company offering online gambling in Kenya, were in Kenya’s High Court attempting to appeal the government’s decision to suspend their licenses. The companies argue that this suspension is illegal.
Ronald Karauri, CEO of SportsPesa, recently told the media that his company would continue sponsoring major sports teams, despite the government’s recent crackdown. He now claims that the government’s relentlessness is forcing the company to end its affiliation with professional sports leagues.
The KRA has also suspended SportsPesa’s digital payment processing system. This has completely halted the company’s online gambling services. What can we expect to happen next?
There are serious questions over how gambling companies can continue operating in Kenya with such massive tax fees being demanded. Most will never have an opportunity to pay this money.
Hope is that SportsPesa and other major gaming operators can convince the High Court to rule against the tax demand and license suspension. SportsPesa has begun to expand into other countries, yet without their main Kenyan operation, this company is at a standstill. Interestingly, football fans in the country may also help this company’s chances.
At the moment, SportsPesa pays nearly 80% of operating costs for some of Kenya’s top football teams. If these sponsorships end, the teams may be forced to shut down. Fans may do what they did in 2018 by demanding the government to relax their stance on the popular gambling company.
There are many questions as to how the government will move forward. The tax demands may force the country’s legal gambling operators to shut down and lead to an increase in Kenyans gambling through unregulated online gambling sites.
What do you think about the future of online gambling in Kenya? Let us know in the comment section below!
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