Q&A: Inside the Kenyan sports betting row
EGR Compliance chats to Yahaya Maikori, partner in Africa-focused gaming law firm Law Allianz, about the escalating row over sports betting in Kenya and how this might serve as a marker for the future growth of the industry within the region
The bitter war of words between the Kenyan government and betting operators has dominated the region’s gaming news over the last month and a half. Sports betting operators have faced repeated attacks from legislators in Kenya over the alleged non-payment of taxes. It has been claimed that despite making a combined KES204bn (£1.5bn) in revenue last year, the firms had paid only KES4bn (£31m) in taxes.
Last week, Betway seemingly admitted defeat in its own dispute with Kenyan authorities, agreeing to charge punters a 20% tax on winning bets. However, SportPesa and Betin have stood their ground, pursuing their own legal cases against the Kenyan government. Kenyan president Uhuru Kenyatta has called for a change to the Kenyan constitution prohibiting all forms of gambling.
Below, Yahaya Maikori, partner in Kenyan law firm Law Allianz, speaks to EGR Compliance about the potential for a ban in the Kenyan market and the motivations behind the dispute.
EGR Compliance: Is the Kenyan president’s calls for a ban on sports betting an overreaction?
Yahaya Maikori (YM): The president’s comments taken in isolation can be dismissed as an overreaction, but if properly contextualised will give us a balanced view of the situation in Kenya. You need to note that the comments are based on available data of gross abuses by operators and the appalling lifestyle of some Kenyan youths, which have a growing problem of gambling-related debt.
According to Geopoll, Kenya has the highest number of youths engaged in gambling in Africa which is at 76% with a monthly spend of KES5,000 each. However, on the flipside the government also cannot avoid the blame for allowing things to degenerate into this chaotic situation. Obviously, such a statement sends out the wrong signals but I doubt it will degenerate to an outright ban.
EGR Compliance: How much of this is due to the tax row between the Kenyan government and the 27 sports betting operators?
YM: It’s connected but I doubt it’s the sole reason. I’ve been terming it as punitive taxes, taxes which are a way to get back at mostly foreign operators for exploiting its people without commensurately giving back. In the draft gaming bill making the rounds, there is a provision for 30% local ownership, which I believe gives a good window into the government’s thinking. However, it remains to be seen what the final draft of the bill will look like.
EGR Compliance: Do you believe the operators involved are justified in suing the Kenyan government over its treatment of sports betting firms?
YM: For me, they are justified in respect of the taxes owed but they are culpable of gross market abuse. Some of us saw this coming and we advocated that they [the betting firms] implement best practices and self-regulation in the face of inadequate regulation.
EGR Compliance: Should the ban become a reality, what would be the likely consequences to the Kenyan gambling market?
YM: It won’t be any different from what’s happened elsewhere. It will simply go underground and enrich the illegal market. In any case, how do you effectively ban a technology driven activity in the 21st century?
EGR Compliance: Do the Kenyan authorities fully understand betting taxation and the sports betting market?
YM: They don’t. The calculation and the rationale is simply untenable especially in fixed odds betting. There needs to be more education and consultation on the part of government in addressing this issue.