SportPesa to cease Kenyan operations after latest tax hike
Fellow operator Betin to close and make 2,500 staff redundant over tax row
Kenya’s largest sports betting firm SportPesa has closed its operations in the country following the imposition of a new 20% tax on all player bets.
In a statement issued by SportPesa on its website, the company said the introduction of a 20% tax on player bets added to the “already heavy tax burden” the company was under.
SportPesa said it was disappointed by the move, claiming the tax hike was “based on a fundamental misunderstanding of how revenue generation works in the bookmaker industry”.
“These taxes have a damaging impact on our customers. The economic incentive to place bets will be removed as the tax will further deprive the customers of their total winnings,” SportPesa added.
This is the second time SportPesa has called the Kenyan government into question over the calculation method used in taxing sports betting operators, following similar claims in August.
The closure comes despite Kenyan authorities clearing the firm to resume operations earlier this month. SportPesa had previously ended its sponsorship of Kenyan sporting events over the row.
Kenya’s second biggest sports betting firm Betin has also closed operations and confirmed it will make all its 2,500 staff redundant.
This follows months of meetings with the Kenyan authorities but “without much success”.
In an internal memo reported by the Star newspaper, the firm said it could no longer meet its financial obligations following the suspension of operations in July and said management had to both “rethink its operational model” and “proceed with the exercise of termination on account of redundancy”.
SportPesa and Betin have been locked in a legal dispute with Kenyan authorities since July, following Kenyan government claims sports betting operators have not paid the correct amount of betting tax.
At the time, the Kenyan government claimed 27 operators had not paid over Ksh.4bn (£31m) in taxes during 2018, although this was disputed by SportPesa and Betin through the Kenyan courts.
Fellow Kenya-facing operator Betway was among ten firms which were cleared to resume operating in Kenya after settling their tax disputes with the Kenyan Revenue Authority (KRA).
Betway and fellow operator Betika agreed to implement the 20% tax rate on all player bets following the reinstatement of their Kenyan licences.