Sportpesa's nine lives in regulatory onslaught

 

SportPesa CEO Ronald Karauri. FILE PHOTO | NMG

A court injunction issued in November 2020 has allowed betting firm SportPesa to continue trading despite various attempts by regulators and warring shareholders to block the use of the brand and its mobile payments credentials.

The SportPesa business is now operated by Milestone Games Limited — which was set up in October 2020 — and has been the subject of a dispute between the original shareholders of Pevans East Africa, which brought the brand into the country and pioneered sports betting.

The High Court injunction was issued after Milestone sought relief from efforts by the Betting Control and Licensing Board (BCLB) to bar it from using the SportPesa tradename, two internet domains (www.ke.sportpesa.com, www.sportpesa.co.ke), two short USSD short codes (29050 and 79079) and three Safaricom Paybill numbers.

These domains, trade names and payment gateways were critical for Milestone if it was to pick up the pieces of the SportPesa juggernaut that had dominated the local betting scene until Pevans' operating licence was cancelled in July 2019 over unpaid taxes and penalties owed to the Kenya Revenue Authority (KRA).

In court, the firm argued that it legally held a licence issued by BCLB, and successfully got leave to apply for a range of orders stopping the BCLB, Communications Authority of Kenya (CA) and telcos from suspending the licence and barring its use of the tradename and payment channels.

“The grant of leave herein shall operate as a stay of execution and implementation by the respondent (BCLB) and interested parties of the respondent's decisions communicated in the letters dated 30 October 2020, and 31 October 2020), pending the hearing and determination of the substantive judicial review application or until further orders by this court,” the High Court ordered on November 16, 2020.

Since the issuance of the injunction, the brand has seen several disputes going to court, mainly centred on the transfer of the trade name to Milestone from Pevans.

In one instance, Milestone was ordered to stop using the SportPesa trademark.

The CA and BCLB have also in the meantime made efforts to block the payment channels as part of a crackdown on the betting industry, which has featured increased taxation and deregistration of non-compliant companies.

Despite these efforts, the brand has continued to trade and is currently offering a mega-jackpot of Sh227.14 million and a weekly jackpot of Sh24.5 million.

SportPesa was launched in Kenya in 2014 by Pevans, a company whose shareholders included Asenath Maina with a 21 percent stake, Paul Wanderi Ndungu (17 percent), Mr Ronald Karauri (seven percent) and Mr Robert Macharia (three percent) and a group of Bulgarian investors.

It quickly became the most popular brand in the lucrative sports betting industry, drawing annual revenue of Sh150 billion at its peak in 2018 before its licence was pulled a year later.

Mr Karauri would later emerge with a controlling 54.4 percent stake in Milestone in the roundabout deals.

Mr Ndung’u and Ms Maina were meanwhile removed from the boards of the SportPesa entities where their stakes were also diluted.

By relaunching SportPesa under Milestone, the owners of the new venture effectively accessed the lucrative business while leaving behind the tax and regulatory troubles that brought down Pevans.

cmwaniki@ke.nationmedia.com