- Legal States
Mike Johnson July 1, 2020 3 min read
Kenya Overturned Controversial Tax Paving SportPesa’s Way Back
The controversial tax on sports betting turnover in Kenya is already part of the history as President Kenyatta signed the 2020 Finance Bill Tuesday, despite some concerns he may not give his approval.
National Assembly Approved, President Signed into Law
The 20% tax on betting turnover was looking more than certain to be carried from the last year’s budget bill to this year’s one, when the Departmental Committee on Finance and National Planning published the Finance Bill 2020, May 8. However, a stakeholder group identified only by a URL, www.shade.co.ke, made a written proposal to the committee to scrap the betting tax, as the high level of taxation resulted in cash-strapped operators which on their turn stopped sponsoring local sports clubs.
Further discussions led to the committee members agree that due to the high tax levels local bettors channeled towards foreign sport betting operators and denied revenue for the government. And they did so because the controversial tax forced a lot of operators out of the market, including market leader SportPesa, while the international ones continued operating.
The UK-headquartered operator won a legal battle against the hostile taxation but it meant nothing in the end as it was forced by the authorities to leave the market, as the Betting Control & Licensing Board (BCLB) suspended its license last summer. SportPesa closed its betting shops across the country, laid off its workforce, and suspended all sponsorship deals for local sports clubs, most of which have been struggling for funding only until recently when another gambling operator stepped in to fill the huge void left by the market’s favorite sportsbook provider.
Soon after SportPesa abandoned operations in Kenya, its website went dark for local access, but recently punters found out the sports betting website of the operator was accessible again, prompting strong rumors the operator was planning a comeback.
Further on, a report was leaked that showed the extent of gambling in the country, implying that SportPesa generated $200 million in a single month during May 2019, showing what was at stake regarding the industry.
Local Businessman Acquires Stakes in SportPesa Companies
Meanwhile, some changes were happening regarding stakeholders in SportPesa-related companies where a Kenyan businessman, Peter Kihanya Muiruri, has over the past 14 months acquired stakes in three companies from the SportPesa circle.
Documents filed by the operator in Kenya, the UK and the Isle of Man showed that Mr Muiruri gained 1% stake in Pevans East Africa, becoming a director there. The Kenyan businessman also acquired 0.5% stake in SportPesa Global Holdings Limited (UK), the company that owns SportPesa’s non-Kenyan betting companies in Tanzania, South Africa, Italy and Russia, as well as lucrative UK business, SPS Sportsoft Ltd, technology provider for SportPesa. The third acquisition by Mr Muiruri is a 3% stake in SportPesa Holdings Limited (Isle of Man), the offshore company that accumulates SportPesa’s revenues from the UK market.
Overturning the tax paves the way for the return of SportPesa to the market where it once was the market leader in sports betting in Kenya. Yet, no official comments have been made so far by the company regarding the recent change of events.