Regulators have clamped down on top sports gambling companies in Kenya but it’s a risky bet

Kenyan regulators battle with the country’s top sports betting companies has reached a tipping point.

In response to a new 20% tax on betting stakes in the country, SportPesa and Betin—two of the country’s largest sports betting companies—have halted business operations in the Kenya. The new taxes are in addition to an existing tax on individual gamblers’ winnings and annual business taxes levied on sports betting companies. SportPesa says it will no longer operate in Kenya until a “non-hostile regulatory environment is returned.”

The new taxes come amid sustained public criticism of the growing influence of sports betting companies which have expanded into thriving multimillion-dollar businesses on the back of servicing local customers.

In the five years since being founded, SportPesa has emerged as dominant player in the sports betting space in East Africa but has also chased global ambitions and is now operating in the UK. The company is also the main jersey sponsor of English Premier League club, Everton and also the Formula 1 motor-sport team, Racing Point.

Soccer Football - Premier League - Everton v Manchester City - Goodison Park, Liverpool, Britain - September 28, 2019  Everton's Dominic Calvert-Lewin reacts after missing a chance to score   REUTERS/Jon Super  EDITORIAL USE ONLY. No use with unauthorized audio, video, data, fixture lists, club/league logos or "live" services. Online in-match use limited to 75 images, no video emulation. No use in betting, games or single club/league/player publications.  Please contact your account representative for further details. - RC17B8A54B00
REUTERS/JON SUPER
SportPesa is Everton’s main club sponsor.

However, the sharp rise of sports betting companies in Kenya, like many other markets, has come with social problems as more gamblers, many of whom are young, struggle to cope with serious risks associated with betting such as gambling addiction, squandering earnings and getting entrapped in debt. In extreme cases some players have become suicidal. Those fears are heightened given the growing ease of mobile betting (especially in countries with a dominant mobile money coverage) not just among adults but also children. Kenya’s measures to control the rise of betting have also included banning outdoor and social media advertising.

While tough regulation on sports betting companies is very likely to draw public support, the closure of major betting companies will come at immediate economic cost. Early estimates suggest the shutdown of SportPesa and Betin could result in 2,500 direct jobs losses, ranging from employees to commission-earning agents who power the companies’ strong retail network across the country. Beyond job losses, there will be secondary effects given how entrenched betting companies have become in the local economy with large advertising budgets and sponsorship of local sports leagues and teams.

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