A man betting on European football games with a mobile phone at sports betting shop. PHOTO | FILE | NATION MEDIA GROUP
Betting firms SportPesa and Betin have finally thrown in the towel.
The
two firms have halted their operations in Kenya and are set to send
home thousands of their employees after a prolonged tax standoff with
the Kenyan government.
The betting
firms, which control more than 60 per cent of the market share in Kenya,
said separately they had resorted to take the action after the taxes
slapped on the industry made the business no longer viable.
'DAMAGING IMPACT'
SportPesa,
which had earlier indicated that it was coming back to business, now
says it is disappointed with the decision by the Kenyan legislature to
impose a 20 percent excise tax on all betting stakes.
“The
tax is based on a fundamental misunderstanding by the Rotich-led
treasury of how revenue generation works in the bookmaker industry. This
decision will have a damaging impact on both customers and treasury,”
the firm said in a statement.
“Further compounded by the currently in-effect
20 percent withholding tax on winnings, the economic incentive to place
bets will be completely removed as the taxes will deprive consumers of
their total winnings,” the firm added.
It
argues that this will have severe consequences for licensed betting
companies, which dutifully pay their taxes and ultimately will lead to a
decline in government tax revenue to near zero and will halt all
investments in sports in Kenya.
“Until
such time that adequate taxation and non-hostile regulatory environment
is returned, the SportPesa brand will halt operations in Kenya,” the
firm said.
On its part, Betin has
sent a notice of termination to all its staff on grounds that it has not
been operational since July 2019.
“Management
has had several extensive meetings with relevant government entities
regarding the company’s licence renewal without much success,” the firm
explains in the staff memo.
“In view
of the above, we have had financial constraints as you might all expect.
As a result of the deterioration of the profitability, the management
has had to rethink its operational model and to proceed with the
exercise of termination on account of redundancy,” it added. It said it
had tried to find an alternative between July and September 2019, but it
has now become financially impossible to maintain the entire workforce.
“We hereby notify you that positions will be rendered redundant on 31st October 2019,” firm said.
With
the shutdown of the two, more than 2,500 people who depend directly on
the industry will be out of jobs in coming days as the government
crackdown on the sector draws its first casualties.
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