BUSINESS

SportPesa walks back threat to close Kenya ops over betting tax

TAGs: Kenya, SportPesa

kenya-sportpesa-tax-threatKenya-based sports betting operator SportPesa is walking back threats to close its local operations if the government doesn’t rethink proposed gambling tax hikes.

On Friday, SportPesa made headlines by announcing that it would shut its Kenyan operations by January 1, 2018, the same day that the new uniform 35% tax on gambling revenue is set to take effect. Company officials stated that the hike from the existing 7.5% tax on betting revenue would render their local operations unsustainable.

But Sunday saw the official Twitter accounts of both SportPesa and its founder/CEO Ronald Karauri post a series of statements to its “esteemed customers” indicating that the company was “the first and remains the best gaming brand in Kenya and SportPesa will be the last gaming operator to ever close in Kenya for whatever reason.”

Friday’s Kenyan media reports were awash in quotes from SportPesa Global CEO Gerasim Nikolov regarding the planned closure, while Karauri was quoted saying “every single local player in the industry will be kicked out” once Kenya’s tax plans took effect.

However, SportPesa’s Twitter account says “our C.E.O.” – it’s unclear whether this refers to Nikolov or Karauri – “was simply trying to demonstrate that no business can survive such heavy taxation on revenue and not profit.” The statement went on to say that SportPesa appreciated its customers and “will continue to provide for them an exciting platform to play.”

The Twitter statement also appeared to walk back SportPesa’s previously announced plan to scrap all sponsorship of local sports teams and leagues. In June, Karauri had said SportPesa’s sponsorship tap – which includes funding for the Kenyan Premier League, Football Kenya Federation, Kenyan Rugby Union and the Kenya Boxing Federation – would run dry as of January 1.

But Sunday’s tweets said SportPesa’s Kenyan customer base was the reason why the company was “able to support sports development and community programs in the country.” The tweet went on to say that the company hopes “the government will give us a chance to continue with our grand plans to grow the economy and develop sports.”

On Friday, Karauri said SportPesa was open to further talks with the government to “agree on a sustainable regulation,” but it’s unclear that President Uhuru Kenyatta will budge. The government had originally proposed a 50% tax on all gambling – betting, gaming, lotteries and prize competitions – and Kenyatta refused to sign the new Finance Bill when legislators opted to leave gambling taxes at their earlier rates.

Comments

views and opinions expressed are those of the author and do not necessarily reflect those of CalvinAyre.com