New Kenyan Gambling Tax Increase Takes Its Toll
The Kenyan government has recently pushed the taxes up from 7.5% to 35%, on all gambling in the country. This has had a serious effect on the local sporting scene with regards to sponsorship.
At first, the Members of Parliament wanted to increase the taxes to 50% but said that they would settle for the 35% increase. They stated that Kenya’s tax was some of the lowest in the world and that the increase was not as punitive as they may think with taxes ranging between 75% and 90% in countries such as Germany, Denmark, and Austria.
Some of the betting companies balked that the increase would just be pushed up each year. MP Hillary Kosgey attempted to remind SportPesa that the funds received from the increased taxes would fund projects that were critical to the country.
After the increase in taxes, SportPesa announced that it would be withdrawing its sponsorship from all the local sports clubs. SportPesa has pleaded with the government to withdraw the tax hike that is to take effect from 19 January 2018, or at least lower the percentage to a reasonable amount. Due to the hike in taxes, SportPesa can no longer afford to sponsor teams, thus leaving them in the lurch.
SportPesa is the local lottery in Kenya, and the first African company to contribute to funding in the English Premier League. Several local sports teams have confirmed that they were verbally informed that they would not be receiving any further funding. As of 1 January 2018 SportPesa could no longer afford the sponsorships.
The Effect of Loss of Sponsorships
AFC Leopards chairman has asked all the sports clubs and federations to appeal to the government to withdraw their ruling in an attempt to still be able to obtain sponsorship from SportPesa. Without their support, the clubs will have to revert back to approaching politicians and begging for funding, which in the long term is not sustainable.
Many teams are dependent on shirt sponsors to fund their teams and meet their financial obligations. Even with funding from SportPesa some team’s still don’t meet their full financial obligations and have to seek funding privately.
Justice Mativo ruled: “I find and hold that the new taxes do not infringe on the petitioners’ rights to property since they are aimed at serving a legitimate public interest. The legislation was legally enacted and it overrides the legitimate expectations of the betting firms.”
To date, SportPesa has not mentioned that it will be withdrawing from the country, or downscaling its operations, but simply withdrawing all its local sponsorships.