How Kenya is banning gambling advertising
The Kenyan government has banned outdoor advertisement of gambling as it moves to introduce a raft of new measures to tame growing addiction and expansion of the lucrative multi-billion industry, which has found a strong foothold in Africa.
Advertisement of gambling on all social media platforms has also been banned in Kenya, dealing a blow to gambling firms which have been spending billion—cumulative—on adverts to lure millions into their businesses.
In a notice to betting, lotteries and public gaming license holders dated April 30, the Betting Control and Licensing Board (BCLB) has also banned adverts between 6am and 10pm, which means all adverts on television and radio will run during watershed hours(after 10pm), a move it says is intended to protect consumers from effects of gambling.
“We wish to remind you that gaming is a demerit good and all demerit goods have the potential to harm the consumer with a possibility of leading to addiction as well as some disorder,” Acting Director Liti Wambua says in the letter copied to mainstream media houses in the country.
Further, the board has directed that any form of gambling advertisement “must” be approved by the regulator, with the advertisement required to contain a warning message about the consequences of gambling, which includes addictiveness.
“The warning message must constitute a third of the actual advertisement and be of the same font,” the control body said, “This board, as a regulator of the industry has a duty to present its customer, members of the public, the young and the vulnerable.”
The directive must be complied with on or before May 30.
Betting in Africa
Millennials in Sub-Saharan Africa (SSA) are using their mobile phones to bet on football and are spending less than USD50 per month, a recent survey by research firm GeoPoll revealed.
The survey carried out among youth between the ages of 17—35 in Kenya, Tanzania, Uganda, Nigeria, Ghana, and South Africa, show that Kenya has the highest number of gambling or betting youths, leading with 76 per cent, with most youth in SSA (54%) having tried their hand at gambling.
“The frequency of gambling is highest among Kenyans compared to their fellow Africans. Whilst the rest bet mostly once a month, a majority of Kenyans bet once a week. Sports betting is the most preferred,” GeoPoll notes in its survey.
Why Kenya has banned adverts
The government ban is seen as a move to address the high addiction rate on betting in the country, where hundreds of thousands of youths are also losing millions to gambling monthly.
The government has indicated that more than 500,000 youths have been blacklisted by various online lending companies (loan Apps) after failing to repay money borrowed to gamble.
Majority of youths gambling in the country are into sports betting, with about 80 per cent placing bets on football matches particularly the English Premier League.
Studies indicate the betting industry’s narrative of rags to riches and stories of overnight millionaires has continued to resonate with the poor and low-income earners.
“While our study found that this group bets with amounts as low as Ksh10 (USD 0.099) – Ksh50 (USD0.49) , their huge numbers multiply the tiny quantities into millions,” the study notes.
Majority of the vulnerable is the unemployed group which stands at about 7 million, according to the Kenya National Bureau of Statistics (KNBS) 2018 data.
The economy last year created 840,600 new jobs, the KNBS Economic Survey 2019, released on April 25 indicates, a slight increase from 787,800 jobs created in 2017 with majority being in the informal sector.
The country’s private sector accounts for 69.5 per cent of the total employment which grew by a paltry 3.0 per cent in 2018, according to the survey released by KNBS Director General Zachary Mwangi.
Out of the seven million unemployed, about 1.4 million are said to be desperately looking for work, a move seen to be among the biggest reason pushing youths to seek quicker ways of making money.
“Our survey found that the highest proportion (40%) of the low-income gambling consumer is unemployed, and a third (29%) are students. This shows that a significant percentage of the low-income gambling consumer hope that gambling will turn into a source of income for them,” GeoPoll says.
Away from addiction, the government seems not to be happy with taxes paid by betting firms.
During a recent meeting in Nairobi, Cabinet Secretary for Interior and Coordination of National Government (including security) — Fred Matiang’i — said the sector had revenues of a staggering Ksh200 billion (USD1.98 billion) in 2018, but only Ksh4 billion (about USD39.5 million) was paid to the government as tax.
The tough speaking minister has since ordered betting firms to pay their taxes in full or have their licenses revoked. Gambling firms have until July 1 to remit what they owe government in the form of taxes .
“Rogue behavior in the betting and lotteries industry is endangering the lives of our young people. We have a responsibility to safeguard the future of this country. This clean up has just started and we will carry it through no matter what it takes, because young Kenyan lives are worth saving,” Matiang’i said in a press statement on May 2.
Control measures
Last year, the government had introduced a 30 per cent tax on betting firms’ earnings which was later reduced to 15 per cent, in a move to tame the growing appetite for investing in the lucrative sector.
READ:Increasing Tax on Betting firms Bad for Kenya
Betting companies are also paying a 30 per cent corporate tax while they are required by law to dedicate 25 per cent of their earnings to social causes like sports sponsorship.
Kenya Revenue Authority (KRA) is also seeking a 20 percent tax on winnings, a move which was temporarily stopped by the courts last month.
READ ALSO:Why Kenya will not collect taxes from sports betting
Other measures by the government to discourage gambling in the country has been restriction on importation of gaming devices, impounding and burning of gambling machines across the country.
There are about 17 registered sports betting companies in Kenya which include Sportpesa, Betin,Betika,Betway,Dafabet,1xbet,Betpawa,Lucky2u,Supabet247, Chezacash,Betyetu,Eazibet,Justbet,Kwikbet,Kenyasportsbet,M-cheza and Elitebet Kenya.
Lost revenue?
The move now leaves media houses, online sites, county governments and the national government itself at limbo, as gambling firms are likely to cut-down on their advertising budgets with closure of some meaning no revenues to the state.
It is estimated the gambling industry in Kenya has an annual turnover of about Sh200 billion (USD1.98 billion), with betting firms being among top advertisers.
One of the biggest revenue sources for county governments is outdoor advertising, mainly billboards which are widely used by companies to reach the masses.
Media houses have also been counting on gambling advertisements after the government centralized its advertising under the “MyGov” paper, which has hugely reduced their advertising revenues.
A recent survey by media monitoring and intelligence firm—Reelforge —shows four betting firms which fall among Kenya’s top 10 advertisers spent a total of Sh4.3 billion (USD43.5 million) on advertising in three months alone last year, thus between April and June.
The four are Tatua (Ksh1.8 billion-USD17.8 million), Lotto (Ksh1.4 billion-USD13.8 million), Betboss (Ksh633.6 million-USD6.3 million) and Sport Pesa (Ksh432.7 million-USD4.3 million).
Leading advertising spenders in the country include Pwani Oil, Safaricom and East Africa Breweries Limited which during the period under review, they spent Ksh1.3 billion(USD12.9 million ), Ksh1.2 billion(USD 11.9 million) and Ksh1 billion (USD9.9 million ) respectively, Reelforge indicates.
Government data shows gross gambling revenue for the 2016/2017 financial year was about Ksh20 billion (USD197.7 million).
The casino sector contributes over Ksh300 million (USD2.97 million) in taxes annually and employs more than 4,000 persons, according to the Association of Gaming Operators (AGOK).
Reason for high betting rate
The elevated rate of gambling in the country has been facilitated by the large mobile phone ownership, according to research, where penetration level is more than 100 per cent.
According to the Communication Authority of Kenya’s latest data, mobile subscription stood at 49.5 million in December.
The survey by GeoPoll notes that mobile phones have become the most convenient tools for gambling, where 75 per cent of those who bet do so using their mobile phones.
Kenya has the highest number of mobile usage for gambling in Sub-Sahara Africa at 96 per cent.
“Although gambling in Kenya has been around for some time now, the upsurge in sports betting has been due to the burgeoning of mobile phones and internet penetration,” GeoPoll notes.
Data/ Internet subscriptions stood at 42.204 million in the December last year after growing by 8.3 per cent from 45.7 million in September same year.
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In South Africa, gross gambling revenues across most sectors of the market (excluding the National Lottery), are expected to expand to R30.3 billion (USD2.1 billion) this year, up from R23.9 billion (USD1.7 billion) in 2014, a recent survey by PricewaterhouseCoopers (PwC) indicates, which is a 4.8 per cent compound annual increase.
