Kenyan betting operators have been handed a lifeline as legislators exempt bookmakers from the new 50 percent gambling tax.
In April, the Kenyan government proposed a 50 percent tax hike on all gambling operators and it was met with dismay by the burgeoning local gambling industry.
Betting operators currently pay 7.5 percent, while gaming operators pay 12 percent, competitions pay 15 percent and lotteries pay five percent. The proposal was part of the government’s Finance Bill and if it was enforced it would amend the Betting, Lotteries and Gaming Act.
But on Thursday, parliament voted against betting operators having their tax rate increased, a move welcomed by the country’s popular betting operator SportPesa.
But the company linked to SportsPesa, Bradley Limited Trading, which challenged the tax hike with a legal case will still be subjected to the tax hike since it is a lottery company.
The company challenged the tax hike back in April after Treasury Secretary, Henry Rotich, said the move would generate revenue for the government and prevent gamblers from getting in too deep.
The owner of SportsPesa, Pevans East Africa Ltd, has a major share in Bradley, which filed a legal case, stating the tax hike was unconstitutional. It was dismissed by the judge because the font was too small.
On Wednesday, members of Assembly’s Finance Committee (AFC) took on the angle, but for betting operators only. The AFC issued a report stating the rate was “punitive enough to discourage such activities.”
While many government representatives dismissed the report, urging the Assembly members to follow Rotich’s plan to combat social issues surrounding gambling, the choice to exempt betting operators from the tax hike was made on Thursday.
MPs voted in favour of an amendment to the Finance Bill which will see the tax rate remain at 7.5 percent for Kenyan betting operators.
But betting operators were the only gambling companies which scored the exemption with lotteries, competitions and other gaming operators still expected to incur the 50 percent tax hike. MPs have said they will revisit the issue again next week after talks with Treasury and other stakeholders.
The decision comes after Nairobi Governor, Evans Kidero, requested the Kenyan government to reconsider the tax hike last week as he believes it is unrealistic. He said the tax would impact sports development as betting operators could pull out.
He referred to the choice by South Africa-based pay TV company SuperSport to pull the plug on airing the Kenyan Premier League (KPL). He added if the uniform tax is enforced on betting operators, local sports would likely be impacted in a similar way.
“What would happen to our sport if firms like SportPesa pull out? So far, SportPesa has invested heavily in KPL, rugby, boxing, rally,” said Kidero.