The introduction of taxes on betting companies in Kenya, led to a mass exodus, of betting firms and their Investors, from the Kenyan market to other suitable and favorable markets for their businesses. The Major reason for the exit was the 20% Tax on all sports bets and a further 20% withholding tax charged on player winnings.
After a long stand-off with the Government, two of the biggest sports betting operators, Sportpesa, and Betin closed shop.
Betin however made a more radical exit of the Kenyan market, as it reported that all employees were fired with management citing redundancy, effective 31st October 2019. Some of the reasons for this extreme reaction by Betin were;
- Heavy taxation
- Frustration by authorities
- Failure of the Government to renew Betin’s operating license
The exit of the firms meant a dip in tax revenues for the Tax authority, loss in passive income for some households, loss in sponsorship for sports activities in the country, and decline in advertising revenue for the creative industry.
On 30th June 2020, President Kenyatta signed the New Finance Bill that scraps of the 20% betting Turn over tax which caused leading operators, Betin and Sportpesa exit the Kenyan market last year. It will be interesting to see the triumphant return of these giants and reclaim the Kenyan territory.
The Government interpretation of the then tax law was dubious at best because it left players to get taxed on both their stake and their winnings while still demanding unpaid taxes from the operators. This left operators with millions in unpaid taxes.
With the signing of the bill, there will be a lot of changes in the sports industry with teams in the Kenyan premier league set to benefit from sponsorship deals that could not have come at a better time when the economy is bleeding. The so-called mashemeji will be the first in line to benefit have been the teams that Sportpesa sponsored before its exit.
Photocredits: Nation Media Group
Apart from Sports, the betting firms’ return will mean a source of Income for players who have benefited from Passive Income as professional or full-time gamblers. It is now not a case of if, like it was last year after the exit, but one of when to see gamblers/players flock betting dens to stake for their teams
The Government will also benefit through;
- Corporate tax levied on these betting companies
- Increase in passive income that will be spent on the purchase of necessities that attract VAT
- Increase in Investments as more Investors come to set shop in Kenya
- Improvement in sporting facilities as betting firms sponsor teams even in the grassroots
We may also see these betting firms invest in:
- Sports academies that are affordable which will mean nurturing of talent
- Partnership with both Local and National Government to build or improve sports stadia
As football pundits may have it, this is set to be the comeback of a lifetime and we should be keen to notice the changes especially in sports as they take place …. We will keep you posted here at Fursaafrica.com.
Author: Edwin K. Gitau
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