Kenyan betting company, Sportpesa, is reportedly planning to pull sports sponsorships after the President signed a new gambling tax hike into law.
After toing and froing over the decision to increase the tax rate on betting, gambling, competition and lottery operators, a 35 percent uniform tax rate has been implemented.
As a result, popular Kenyan bookmaker, Sportpesa, has announced it will be pulling its sponsorship with the Kenyan Premier League (KPL) and other sporting teams.
SportPesa founder and CEO, Ronald Karauri, took to Twitter last week to reveal the bookmaker is “giving notice to clubs and unions” that it will be withdrawing all sponsorships from January 1.
Karauri blamed the tax hike for the sponsorship pull but he added the company has given enough time for the sporting codes to “to plan accordingly.”
Sportpesa sponsors both Kenyan sporting clubs and international teams, but according the Karauri only local sponsorships will be pulled.
This means the funding for the two biggest Kenyan football teams, Gor Mahia and AFC Leopards, as well as the Kenyan Premier League (KPL) and the Kenya Football Federation teams, will be pulled from the start of 2018.
But the sponsorship for the English teams, Everton and Hull City, along with the Tanzanian premier league clubs will remain in play.
Other codes which will be impacted include local boxing clubs and rugby teams.
Karauri, who founded Sportpesa in 2014 which has transformed into a company that generates $100 million in turnover a year, then briefed the press in Nairobi explaining the sponsorship cuts.
“The expected financial projection will force closure of firms and that there’s no company in the country which has the capacity of complying to the tax,” he said.
“The tax bracket tax is not fair as some operators can barely sustain their businesses.
“The Gaming Operators in Kenya are likely to stop funding and carrying out Corporate Social Responsibility projects and this will put a lot of youths out of jobs.”
KPL CEO, Jack Oguda, said the sponsorship cut will hurt the local sporting industry.
“If it really happens, then it will be a major setback in everything as far as sports is concerned,” he said.
“This means people are going to lose their jobs because there will be no money to pay them.
“What about the players? They will have no salaries and their families will suffer because they will not afford to sustain themselves.
“This is a company that has invested a lot in sports and it is us to lose in the long run.”
The Kenyan gambling industry strongly objected to the initial uniform tax rate too, with betting companies including Sportpesa previously paying a comfortable 7.5 percent tax rate. Lotteries were taxed at five percent, casino gambling operators at 12 percent and competitions at 15 percent.
While the initial tax increase proposal was thrown out, President Uhuru Kenyatta slammed the lack of reform in terms of the gambling industry when the bill was sent to him.
He suggested a 35 percent uniform tax hike for all gambling companies, citing Kenya’s vulnerable citizens, including children, and the country’s economy as the reasons why the industry needs an overhaul.
The National Assembly then considered his recommendation and added it to the Finance Bill 2017, which President Kenyatta signed into law.
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