"" Licensed Sports betting Companies increased by 31.5% in Kenya

Licensed Sports betting Companies increased by 31.5% in Kenya



The list of Sports betting companies licensed to operate in Kenya has hit 100, defying a government’s policy to clamp down on gambling through the imposition of higher taxes on the companies and punters.

The list of betting firms licensed for the year ending June published by the Betting and Licensing Control Board (BCLB) shows the number had increased to 100 from 76 in a similar period a year earlier—reflecting a 31.5 per cent growth. It is interesting to see that Kenya’s betting and gambling industry continues to be attractive for locals and investors as the burgeoning numbers which the industry continues to experience substantial growth. As a result, a considerable betting enthusiast in the East African country.

Kenya last year reintroduced excise duty on betting stakes to 7.5 per cent, which means the government first takes Sh7.50 for every Sh100 a gambler places as a bet irrespective of winnings. It also takes 20 per cent on winnings and levies additional taxes on the betting firms in efforts meant to make gambling unattractive. But investors in the betting space have been undeterred by the government’s attempts to curb the business through higher taxation and tighter regulation. BCLB chief executive Peter Mbugi said that most of the 24 new firms are owned by locals.

“Since the start of the year, we are witnessing more Kenyans-owned companies interested in the betting industry” – Mr Mbugi told local media.

They include Mofabet registered as Johannes Swift, Zukabet registered as Muvana Limited, Unibet, Hollywood Bets, and Safe bet. Online sports betting companies such as SportPesa proliferated before the drastic tax hike, riding a wave of enthusiasm for sports. The government says the gaming industry achieved a combined revenue of Sh204 billion in 2018. That sparked concern about the social impact of betting, prompting new gambling regulations, including restrictions on advertising. Betting is popular among young people – employed and the jobless — who see it as offering a game-like thrill besides an opportunity to make quick money. The government earlier said 54 per cent of Kenyans involved in betting were low-income earners.

While a few punters get lucky and win large sums of money, the activity represents missed opportunities and losses for participants. Kenyans spent Sh83.2 billion to place bets in the six months to September through Safaricom’s M-Pesa platform alone, underlining the gambling craze that has become a national pastime. The telco’s disclosures show that the value of the bets jumped 69 per cent from Sh49.2 billion a year earlier. Safaricom, the Kenya Revenue Authority (KRA), and betting firms are the biggest beneficiaries of the growth and intensity of betting activities, pocketing billions of shillings. The telco’s revenue from betting doubled to Sh2.95 billion from Sh1.48 billion. The taxman is estimated to have collected at least Sh6.2 billion from punters using M-Pesa.

The KRA takes 7.5 per cent of the value of bets placed besides 20 per cent of winnings and corporate taxes on betting firms. The volume of bets funded from M-Pesa accounts surged 84.7 per cent to 347.8 million, signalling a growing gambling addiction. The Sh83.2 billion wagered in the six months, for instance, is enough to buy 2.05 billion shares of Safaricom, equivalent to a 5.1 per cent stake in the country’s most profitable firm. Such a stake would earn about Sh2.8 billion annually, based on the telco’s latest distribution of Sh1.37 per share for the year ended March.

Sports betting is now the second-largest business line by the revenue under M-Pesa’s payments and betting unit after consumer-to-business (C2B), which generated sales of Sh5.1 billion in the six months to September. The disclosures show that Safaricom charges betting firms and punters some of the highest fees compared to other M-Pesa users. The betting firms are not required to make their accounts public because they are private entities. A court case pitting the KRA against Pevans East Africa, which pioneered betting in the country using the SportPesa brand, highlighted the lucrative business the company was doing before its operations were scuttled by the taxman. Court papers showed that Pevans alone took in bets worth Sh149.7 billion in 2018, making it the second-largest company in Kenya by revenue after Safaricom.

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