Kenyatta overturns tax on sports betting

It was only last year that SportPesa, a Kenyan sports betting operator, were looking at the real possibility of having a 20% tax on all their yearly turnover. Such a move would have devastated operators’ ability to continue sponsoring local sports clubs, with their lucrative sponsorship deal with Everton from the English Premier League, set to end at the end of this season.

The five-year partnership between SportPesa and Everton was not unique when considering that half of the twenty Premier League teams started the 2019-20 season with betting companies as kit sponsors according to Gambling Times Magazine. Nonetheless, the sponsorship only started in 2017 and was due to end in 2022 but ended in a sour note which is largely due to that potential levy as well as the media backlash that followed both in Kenya and the UK. Everton’s club spokesperson spoke about the termination of the deal earlier this year: “This has been a difficult decision but one that allows us to best deliver on our commercial plan and to grasp the new opportunities now open to us." Adding that "The club would like to thank SportPesa for all of the work that has been done together."

To date, we are stil waiting on an official statement from the SportPesa stakeholders in response to this beneficial development that will allow the betting company to reassert itself as one of the strongest operators in Kenya and East Africa. The last big statement about this matter came in August last year when SportPesa CEO, Ronald Karauri, tried to reassure SportPesa customers that they were hoping to resolve this matter, by saying: “We are committed to dialogue with all relevant stakeholders, to develop a mutually beneficial solution that will complement the Government’s development agenda, as well as provide a stable business environment.”

Perhaps the uncertainty of the country’s economy has something to do with President Uhuru Kenyatta’s decision to scrap the 20% tax on betting operator’s turnover as Kenya along with all other nations is putting measures in place to combat the economic downturn following the COVID-19 pandemic. In a recent press release published by the World Bank, it was predicted that Kenya might be able to ride this wave with “Kenya’s medium-term growth is set to rebound fast (to about 5.6 percent over the medium term), on assumption that investor confidence will be restored soon after the COVID-19 pandemic is contained. The greatest uncertainty to this outlook, however, is the extent of the impact of COVID-19 global pandemic on Kenya. Unanticipated large-scale community transmission of COVID-19 could disrupt domestic economic activity more severely and reduce growth below the baseline.”

As such, it is very plausible to assume that the current pandemic along with a loss-making business may have helped Kenyan sports betting operators to be saved from a financial peril.

This article does not necessarily reflect the opinions of the editors or management of EconoTimes