Back in July, we reported that mobile gaming and gambling was under threat in Kenya after a crackdown on licenses issued to gambling companies. The Government had ordered that seventeen different betting companies cease operations, and that their directors be deported from the company. While welcomed by some moral campaigners, the news brought the threat of job losses in Kenya’s gambling industry, and also had an unintended knock-on effect on some sports.
One of the companies affected by the licensing issue was gaming giant SportPesa, who reacted to the loss of their license by effectively withdrawing sponsorship from all major sports within the country. Sponsorship money is a vital lifeline to several major Kenyan sports, and the existence of several competitions depends on money coming in from big-name sponsors. The Kenyan Premier League was expecting to be particularly badly hit, with some officials wondering whether it would even be possible to start the season without an official sponsor in place. Fortunately, the season has been able to start regardless – and SportPesa is about to get back to work within Kenya after days of talks with government representatives.
The Revenue Authority Acts
It’s unknown whether SportPesa’s threat to withdraw funding and support had any bearing on the ruminations of the Kenya Revenue Authority, but the regulator has now cleared SportPesa in its ongoing investigation into the tax affairs of several major gambling companies within the country, which has, in turn, cleared the way for SportPesa to resume trading. The next step is for the company to lodge an application to regain its trading license, which it has indicated it will do immediately. That application will have to go before the county’s Betting Control and Licensing Board, but isn’t anticipated to encounter any issues on the way to approval.
The move marks a remarkable turnaround for both the company and the Kenya Revenue Agency in a comparatively short space of time. SportPesa’s license was originally revoked in July after the Government publicly claimed that the company was intentionally failing to comply with tax regulations, and therefore failing to pay its fair share of tax revenue. SportPesa has always denied that charge.
In what appeared to be an act of vengeance, SportPesa announced that it would cancel all of its national and local sporting sponsorship agreements and advertising contracts within Kenya, giving the reason that the Government’s decision had made it impossible for them to make a profit within Kenya, and that the trading environment within the country was ‘unfavorable.’ At that point, it was feared that the company would completely withdraw from the company, resulting in the loss of all related jobs.
A breakthrough appears to have been achieved at some point during the week beginning September 2nd, with SportPesa releasing a statement the following day confirming that there had been a ‘noteworthy improvement’ with licensors and government authorities. The statement went on to say that they’re now committed to helping to ensure that the Government has ‘a better understanding’ of how the gaming industry operates, while at the same time developing a ‘shared perspective’ on tax administration.
In a statement which could be construed as a commitment to renewing its sponsorship and advertising activities, SportPesa closed off their statement by saying that they will ‘support the government’s long term growth agenda,’ although whether that statement will be followed up by the resumption of their previous sponsorships remains to be seen. It’s not out of the question that the Kenya Revenue Authority’s decision to clear the company – or the Betting Control and Licensing Board’s decision to award them a new license – will be conditional on them doing exactly that.
Several More Companies Cleared
Although it’s the news about SportPesa which is generating the most press attention, they are not the only one of the companies who had their licenses withdrawn during July to subsequently regain permission to do business inside Kenya. Ten other companies have also now been cleared, including Bet Boss, Palms Bet, and the much-larger global betting company Betway – all of whom will be eager to pick up where they left off. All of the cleared companies are significant employers within Kenya, and all will generate significant tax revenue if operating within the rules.
Where there still appears to be some confusion is where the law stands on customers who access betting apps through their phones. At the time the companies were banned, it appeared likely that Kenya was about to issue an outright ban on gambling activities performed through mobile phones. This wouldn’t just be bad news for those who bet on sports, but also for those who use their phones to access mobile slots websites. Websites which host mobile slots are seen as a convenient alternative to visiting UK slots casino in person. Thousands of people in Kenya engage with mobile slots websites on a daily basis without developing an unhealthy relationship with the hobby, and they were as unhappy at the prospect of losing access to those mobile slots as the betting companies were about losing access to their players.
The general issues around gambling in the country cannot be solved as easily as restoring licenses to companies which have previously lost them. As we said in July, the Betting, Lotteries and Gaming Act of 1966 is no longer fit for purpose, as it’s been circumvented and rendered obsolete by the invention of the internet. Draft legislation to replace it is working its way through the political system, but the wording of the proposed replacement bill makes it absolutely clear that mobile gaming will be prohibited in Kenya. While there will be fines for firms which offer mobile gaming facilities, individual citizens caught playing mobile betting games may be subject to a fine of up to two million shillings. The bill has not yet become law, but unless it encounters more significant opposition than it has done so far, it will inevitably be passed into law in the near future.
How this might affect companies like SportPesa and Betfair remains to be seen. It’s likely that the ability to offer mobile betting facilities to their customers is integral to their business plan. If that right – and line of profit – is suddenly taken away from them, we might find that the betting companies and the Government will be at loggerheads once again in a few months time. This time, though, it will be the betting companies making demands of the Government instead of vice versa.