Sports betting fans in Kenya, with an incentive to win a handsome load of cash, will have to rely on other outlets as large-players SportPesa and Betin quit the market in a rather disappointing manner.
The duo’s exodus, occurred shortly after a series of engagements with the government, proved to be a failure. SportPesa commented on it’s return ( to the market) conditions, citing that they would resume operations when “adequate taxation and non-hostile regulatory environment” are in place.
The latter was also compelled by the July hit, where the government ordered telcos to shut down 27 sports betting pay bills and shortcodes, SportPesa and Betin inclusively.
According to The Citizen report, the government of Kenya saw uneven distribution of the benefits within the sector, as sports betting companies garnered over $2 billion in 2018, but the government share stood at $40 million.
According to PWC, Kenya is the third largest, sports betting market in Africa after Nigeria and South Africa.
Smartphones and mobile digital technology have facilitated these countries to ascend on the list. Surprisingly, South Africa is behind Kenya, on utilizing mobile phones for gambling, Geopoll reports show 96 per cent of gambling is done via mobile phones.
Geopoll records show Kenyan youth to be pulled to betting, as 75 per cent of 17 to 35-year-old youth, are engaged in the activity, spending over $ 50 on average per month.
SportPesa and Betin had the largest share in the betting markets, whereas media reported the sports betting giants market share stood at 60 per cent.
SportPesa which had begun holding the market in East Africa, declared its disappointment with the Kenyan legislature decision to impose a 20 per cent excise tax on all betting stakes.
“The tax is based on a fundamental misunderstanding by the (former Treasury CS Henry) 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 statement reads.
Further, SportPesa cited that it was compounded by the present 20 per cent withholding tax on respective winnings, which ultimately removes the actual incentive for customers to engage in betting and eventually deprive them of their total winnings.
In that context, the two players with large market shares won’t exit without affecting the entire industry at some point. SportPesa pointed out their facts that: severe consequences might arise to remaining licensed betting companies, adhering to the regulations, which will hurt their companies, eventually narrowing the government tax revenue package and discourage all investments in the sector.
On the other hand, Betin a second-largest player began taking redundancy procedures to its staff. Closing the procedure by the end of October
According to available media reports, over 2,500 people stand to be affected by the duo’s exodus in Kenya. The current taxing regulations marred the ability to the firm to prolong their stay in Kenya’s sports climate.
“This has been occasioned by the fact that we have not been operational since July 2019 a fact we are all aware of. Management has had several extensive meeting with relevant government entities regarding the company’s license renewal without much success,” firms memo reads.
Betin had ceased its operations since July 2019, whereby in it’s statement to staff, the firm highlighted the deterioration of profitability forced their hand to resort on termination of its human capital in Kenya.
“We hereby notify you that positions will be rendered redundant on 31st October 2019,” the firm commented.
With the two players exodus, it is a matter of time for either: adjustment of sports betting operations for the remaining players or Kenya losing other players in light of its “unfavorable taxing conditions”.