Betting firms hope hefty tax will not be re-introduced

KRU chairman Richard Omwela (left) and SportPesa Brand Ambassador Georgina Maina (Center) with CEO Ronald Karauri (right)

NAIROBI, Kenya, May 31 – While welcoming the move by Parliament to retain betting tax at the current 7.5 per cent from the 50 per cent proposed by National Treasury Cabinet Secretary Henry Rotich, Association of Gaming Operators chairman Ronald Karauri is worried the same might recur next year.

Speaking to Capital Sport on Wednesday, Karauri was relieved by the development but called for consultation with the government to avoid occurrence of the same when the budget for the 2017/18 financial year is read in Parliament.

Karauri, who doubles up as the SportPesa CEO was adamant his company which sponsors various sports clubs and institutions, will not hesitate to withdraw their package if the hefty tax proposal is reintroduced next year.

“At least there is some faith back and I am happy Parliament made a sober decision. The problem has been brought up because there was no consultation from the government side. Heavy taxation on betting firms will not regulate the industry but instead encourage back street betting,” Karauri stated.

“But we don’t want to get shocked next year because it’s not certain. The approval was only for this financial year. We cannot plan for next year because it’s uncertain and that’s why I am insisting on consultation to settle this mess once and for all.”

“If it is imposed again next year, we will have no choice but to pull out all the sponsorships because as a business our revenues will go down,” her added.

READ: Parliament shoot down 50pc tax proposal on betting firms

Meanwhile, beneficiaries from the betting firm have expressed their delight after Parliament shot down the proposal.

Kenyan Premier League CEO Jack Oguda has said the sporting industry in the country would have been suffocated to death had Parliament gone ahead to implement the Bill.

“I would like to congratulate Parliament for shooting down that proposal. If our sponsors who also bankroll clubs and the federation had pulled out, then we would have been greatly affected and a source of livelihood for most taken away,”

“It will now give us an edge to grow sports in the country because such sponsors help us to invest more in the game. It will also open up a door for more betting companies to come on board and sponsor teams with Sofapaka and Mathare United already having betting companies as their sponsors,” Oguda revealed.

Kenya Rugby Union (KRU) also received a huge amount of sponsorship from SportPesa in their Sh607m deal that saw the national Sevens and 15s teams reap from the package.

“We are delighted that the MPs supported us in what we have been crying for. If it had gone through SportPesa would have been forced to pull out. This is for the benefit of our sport,” KRU boss Richard Omwela noted.

The two KPL giants Gor Mahia and AFC Leopards were not left out in celebrating the move with K’Ogalo chairman Ambrose Rachier telling Capital Sport the proposed tax could have chased away investors, hence affecting the sports fraternity.

“It’s a commendable decision because if it had gone through it was tantamount to kill the goose that laid the golden egg. The betting companies have really revived the sports industry especially in football where players can now earn a decent salary,” Rachier who is also the KPL Chairman voiced.

His counterpart from AFC Leopards Dan Mule said, “As a club we have suffered for a long time due to issues of sponsorship and when SportPesa came, they were God-sent to us. Passing that bill would have meant they had to reduce their sponsorship because obviously they are a business. It is great news that parliament has shot down that bill and the fear we had that our sponsors would pull out is now taken away.”

The betting firm sponsored Gor to a tune of Sh60mn and AFC Leopards Sh45mn per annum, with an increase of five per cent every year in their five-year deals.

Betting firms will now have to pay 7.5 per cent of their revenue to the taxman by the 20th of each month after paying out winnings, while lotteries will pay five per cent of their turnover by the same deadline.

Gaming companies will also hand in 12 per cent of their revenue after paying out winnings.

The Kenya Betting Control and Licensing Authority will have the power to regulate and control the operation of betting and gaming and conduct of lotteries and prize competition.

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