Kenyan’s parliament has rejected plans to offer local gambling operators a break from their recent tax hike, potentially dealing another blow to local sports sponsorships.
On Thursday, Business Daily reported that the National Assembly committee on Labor and Social Welfare had withdrawn proposed amendments in legislation seeking to amend to the recently revised Betting, Lotteries and Gaming Act.
The Act was changed last summer to impose a uniform 35% tax on all gambling revenue, resulting in drastic increases in taxation on Kenyan betting operators, who previously paid a tax rate of just 7.5%. The changes took effect on January 1.
Betting operators like SportPesa, who claimed the tax hike made their local operations unviable, continued to dialogue with the government in the hope of achieving some compromise. This approach appeared to be working when National Assembly Majority Leader Aden Duale proposed reducing the uniform tax rate to 15%, while simultaneously introducing a 20% tax on gamblers’ winnings to offset the hit to the government’s coffers.
Victor Munyaka, chairman of the committee that recommended scrapping the tax reduction, said Duale’s proposal failed to consider the fact that the tax hike had been approved by the legislature following ‘broad consultations’ and court rulings have dismissed legal challenges of the tax hike’s constitutionality.
It remains to be seen how the news will affect SportPesa’s announcement last month that it was renewing the local sports sponsorships it scrapped following the imposition of the higher tax. SportPesa may have a right to feel it was hoodwinked into renewing these sponsorships as a demonstration of good faith following the proposed tax reduction.
Kenya is considered one of Africa’s most mature online betting markets. A Nielsen survey last month found Kenya’s online betting penetration was 27%, much higher than neighboring Tanzania (5%), Uganda (4%) and Rwanda (2%). Kenya’s online gaming market scored second on the penetration list with 19%, narrowly outdone by Rwanda’s 22%.
Nielsen claimed SportPesa was the overwhelming Kenyan online betting favorite, with 82% of local bettors having an account with the operator. Runner-up Betin was well back at 40%, followed by Elitebet (22%), Betika (12%), Mcheza (12%) and Betpawa (10%).
