Finally, after the bill was brought forward by GEM MP Jakoyo Midiwo, Cs of finance, Henry Rotich has suggested a 50% tax on gambling, but the president rejected it citing it is too high and signed the 35% tax into law, it is this move by Mr. President that has brought a lot of debate from various stakeholders in sports including SportPesa Boss Ronald Karauri and FKF president Nick Mwendwa.
The question that needs to be answered is? I want to answer this question very clearly without being biased:
First, betting companies might consider relocating to other countries. We have seen other international Betting companies like Bet365 and William Hill succeeding in this sector because they are not subjected to tax. Sportpesa might consider this option and this will be a huge blow to the government because when Sportpesa decides to relocate into a pure betting online company and relocate its headquarters to another country, it will not be subject to tax and the government will emerge the loser.
Another factor to consider when Betting companies are driven out of the market is that government will collect a reduced amount of tax. In 2016, KRA collected approximately 4 billion shillings. Kenyan Punters will also move to international betting sites that are not subject to tax.
It is clear that with over 6000 clubs countrywide, let alone the national football team, the government will not be able to sponsor this entire clubs, it needs other players in the market. Gone are the days when players use to go home hungry. Sportpesa has been sponsoring Kenya Premier League, The Rugby Sevens, The Kenya Boxing team and Sportpesa all stars. When Mr. President signed the 35 % tax into law, SpoprtpesaCEO, Ronald Karauri, announced to all associations that His Company will withdraw its sponsorship from 1st Jan 2018, let’s wait and see if the government will be able to sponsor them. The Cs for Sports Mr. Wario said that the ministry will be able to sponsor the clubs, now with the corruption in the ministry evident with the one in we saw in the Rio Olympics, we are waiting to see how things will play out.
This move is also seen to be a negative move from the government on its citizens; this is because instead of supporting local companies to thrive, it tries to shut down the ones already in existence.
With all the factors in consideration, and also considering that Sportpesa is number 3 in Africa, Number 1 being South Africa and Nigeria coming in second place, The final verdict is, The government is the one to lose here because Sportpesa can decide to be a global Betting Company and thus not subject to tax. Let me know what you think.