Sports betting in Kenya looks set to experience another boom after a tribunal ruled in favour of betting sites in a tax dispute with the government.
The online gambling industry in Kenya has been in a protracted tax dispute with the government for most of 2019, but the betting sites could well have the last laugh after a Kenyan court recently ruled in the bookmakers’ favour. The government had demanded that the betting sites paid tax on bettors’ stakes, as well as winnings, but the Kenyan Tax Appeals Tribunal has sided with the bookies, ruling that tax should only be levied on player winnings.
Sports betting in Kenya has been growing at a very rapid pace over the last few years, with the East African nation emerging as the third largest market behind Nigeria and South Africa, but the industry went into shutdown a few months ago after the government cracked down on the activities of the bookmakers.
Over the years, betting sites in Kenya haven’t exactly been in great terms with the government, but trouble escalated earlier this year when the latter attempted to impose tougher tax rules on the bookmakers. The government demanded that the betting sites paid tax on bettors’ stakes, as well as winnings- a move which the bookies naturally kicked against.
Kenyan authorities withdraw licenses from over 20 betting companies
The Kenyan High Court initially block the new tax rules after complaints from the betting sites, but the reprieve would be temporary. At the start of July, the Betting Control and Licensing Board withdrew licenses of over 20 betting sites that had failed to comply with the tax rules, throwing the sports betting industry in the country into turmoil.
The government also ordered payment portals like M-Pesa to discontinue their association with the sports betting companies, giving millions of bettors 48 hours to withdraw funds from their betting accounts. The government would continue its tough stance on betting sites, with President Kenyatta pushing for tax on bettors’ stakes to be increased from 10% to 20%. This was voted through by Parliament in September.
Hamstrung by a “hostile regulatory and taxation environment”, leading betting site, SportPesa ceased its operations in Kenya, terminating its sponsorship of sporting activities in the country, and laying off over 400 employees.
Reprieve for betting sites in Kenya
After a long, drawn-out battle with the government, it appears there may be some light at the end of the tunnel for the betting sites after all, with the Kenyan Tax Appeals Tribunal ruling that tax can only be collected on player bettors’ winnings and not stakes. The tribunal also instructed that the tax authority should collect tax directly from the bettors, and not the betting site.
Unsurprisingly, the betting companies have thrown their weights behind this ruling, with SportPesa CEO, Ronald Karauri calling on the authorities to take the court’s decision “fully on board” and set laws that align with global practices, while stating that the company will reconsider its future in Kenya.