Kenya’s sports betting operators have won a legal victory in their war with the government over how wagering is taxed.
On Thursday, Business Daily reported that the Tax Appeals Tribunal in Nairobi had sided with the country’s two largest betting firms, SportPesa and Betin, who argued that the government’s new 20% betting tax applies only to punters’ net winnings, not their betting stakes.
The Kenya Revenue Authority (KRA) has been hounding local betting operators to collect the controversial 20% tax on punters’ winnings, which took effect on July 1, 2018. However, betting operators and the gambling public took issue with the KRA’s amended definition of winnings, which held that the tax applied to all money paid by operators to winning bettors, including the return of their original betting stake.
The Tribunal also shifted more responsibility for remitting the tax onto the individual punters rather than the operators deducting the tax at source. The Tribunal’s intention was reportedly to shield betting operators from prosecution by what has by now revealed itself to be a very aggressive government.
SportPesa and Betin were among 27 operators whose licenses were suspended by Kenya’s Betting Control and Licensing Board (BCLB) on July 1. The KRA accused the bookies of owing hundreds of millions of dollars in unpaid taxes and suspended their digital payment processing channels. Both SportPesa and Betin were ultimately forced to suspend their Kenyan operations and lay off hundreds of staff.
It’s unclear what effect Thursday’s tax ruling might have on either company’s capacity to resume its local operations, as the last word from the BCLB was that suspended operators would have to “apply afresh” for new licenses.
For the record, SportPesa has won legal skirmishes over related betting tax issues in the past, but the government has only redoubled its efforts to compel the operators to fill the government’s coffers.
Just this week, the KRA put betting operator Betika in its crosshairs, seeking SH1.75b ($17m) in tax arrears and asking a court to let it take the money from Betika’s bank accounts. Betika was one of the few Kenyan-licensed firms that imposed the KRA’s version of the winnings tax on its customers from the start.