Gambling operators sue Kenyan government over tax hike

Gambling operators in Kenya are suing the government over plans to increase the tax on gambling revenue.

As expected gambling operators have expressed their outrage over the new uniform 50% tax on all gambling revenue detailed in the government’s 2017-18 budget proposal.

Delivered by Kenya’s Treasury Secretary, Henry Rotich, at the end of March, the significant tax hike will affect sports and lottery operators, including Bradley Limited Trading, the operator of the Pambazuka National Lottery.

The company, which use to only pay 5 percent tax in line with all lottery operators in the country, responded by filing a court challenge on Monday after it only heard about the increase when the budget proposal was released

Pevans East Africa Ltd, which owns sportsbook SportPesa, holds a majority stake in Bradley and no doubt supports the legal challenge since bookmakers have only had to pay 7.5 percent of gambling revenue.

The lawsuit targets Rotich, suggesting he doesn’t have the authority to impose new taxes – only the Betting Control and Licensing Board can.

“The minister acted without jurisdiction and was not authorised to take the administrative action and make the decision and proposal in the Budget Statement with respect to the increase of the taxation rates for the betting, lotteries and gaming industry as he is not the minister responsible for the industry under the Betting, Lotteries and Gaming Act, Chapter 131 of the Laws of Kenya and acted in contravention of the law,” it argues.

The suit goes on to argue gambling operators weren’t warned about the tax increase and were put off since Kenyan lawmakers had already attempted to increase the tax in a new bill which was never voted on.

The suit also requests that Rotich’s tax hike be overruled and for the imposition of the new taxes to be suspended for the time being.
It may be considered since global financial analysts are warning the government that betting operators won’t remain in the country if new tax hikes are imposed.

But Kenya’s President, Uhuru Kenyatta, has commented on the tax increase stating the government chose to do so due to concerns “about the rise in betting, especially among our school-going children.”

He did add it wasn’t the government’s intention to kill off sports betting operators, along with other gambling sectors, and if the taxes were “too high, we have a reasonable and responsible minister and parliament which can review it.”

Kenya’s sports betting market and lottery industry was thriving prior to Rotich’s new budget. Unfortunately, the public had grown wary of the growth, more specifically the illegal slot machines allegedly run by Chinese nationals, which ultimately resulted in the huge tax increase proposal.