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Overtaxation Threatens Kenya’s Betting Industry

Many sports federations warned that the recently-introduced by President Uhuru Kenyatta legislation, aiming to double up taxation on betting companies to 35%, may damage the betting industry in Kenya, vexing operators to leave the local gaming market and never look back again.

A number of organizations and federations, which are operating under the patronage of different betting firms raised concerns that the President’s proposal to raise the tax rate may damage the betting industry in Kenya. The federations urged lawmakers to rethink the overall situation, before taking any decision. President Uhuru Kenyatta came up with that proposal in June, declining the lawmakers’ advice to keep the former 15% tax. Mr. Kenyatta’s decision triggered a great reluctance by the betting companies.

It was explained that by doubling up the taxes, Mr. Kenyatta is trying to bridge some gaps in the budget. But this may produce exactly the opposite effect, as many operators started to consider exiting the Kenyan market. According to a recent research, conducted by Trends and Insights for Africa (TIFA), the majority of the nationals (around 60%) oppose the newly introduced Law.

The results from the research also showed that 22% voted in favor of the new Law, outlining the risk of social ills and gambling problems as the reasons for their stance. Most of the people, who supported the implementation of the Law are above 45 years old.

In an exclusive interview with Capital Sports, Kenyan Premier League Chief Executive Officer Jack Oguda explained that the new taxation will decrease betting companies’ investment in sports, which will increase the unemployment rate, as many young people are engaged in the sports sector. Currently, betting firms financially support the sports development in Kenya, as it witnessed a significant decline over the past years. SportPesa’s representatives, a betting firm which invests heavily in Kenyan sports, commented that supposing that the new Law comes into effect, they will reconsider the company’s expenses.

The betting companies are the main sponsors of the Football Kenya Federation, Kenyan Premier League, Kenya Rugby Union, the Boxing Association of Kenya, the Extreme Sports Super Eight League as well as Gor Mahia, AFC Leopards, Nakuru All Stars and Kenya Harlequins Rugby Club. The new Kenyan Law may lead to the exodus of betting companies and leave the sports entities with a threadbare budget.

The proposal unleashed a wave of lobbying over the tax increase, aiming to convince authorities that the implementation of the new Law threatens the development of the local sports, as well as the current 15% revenues, which the government secures from the betting operators.

The MPs should take the matters in hands, as they will take the final decision to implement the new Law or retain the old taxation system.