Sportpesa says Kenyan President has “overstepped” in court

Sportpesa has challenged the uniform tax hike on Kenyan betting operators in court.

The new law, introduced last month after the 50 percent uniform tax clause was scrapped, requires bookmakers to pay 35 percent tax on gaming revenue.

When President Uhuru Kenyatta signed the 35 percent tax on all gambling operators, including betting companies, into law, reports emerged Sportpesa was shutting up shop in the East African nation.

The tax increase is significant for betting operators as they originally paid 7.5 percent tax on revenue – lottery companies paid five percent, competitions paid 15 percent and casino gambling operators paid 12 percent.

Sportpesa was forced to publicly denounce these claims but CEO Ronald Karauri has revealed the company would be pulling their local sporting sponsorships, including with the Kenyan Premier League (KPL), from January 2018.

Along with the KPL, the Kenya Rugby Union and Football Kenya Federation will also be impacted as the sporting codes were supposed to receive Sh1.5 billion from Sportpesa over the next five years.

But they could get a reprieve if Sportpesa’s court case is successful.

Kenyan betting operators thought they were off the hook when the initial 50 percent tax increase was scrapped from the Finance Bill.

But when it was sent to the President to sign, he slammed the lack of tax and recommended a 35 percent uniform tax hike.

President Kenyatta argued that there needed to be something done to protect the vulnerable. He added that a tax on sports betting and gambling companies, with the revenue generated going to the new National Sports, Culture and Arts fund, would help.

Sportpesa filed the suit on Wednesday arguing that the Kenyan President overstepped his mandate and that he came up with the tax figure without consulting lawmakers.

“The President arbitrarily imposed his subjective opinion on what ought to constitute state tax policy while ignoring public participation and the input of fiscal technocrats who concluded that 50 percent tax for the betting industry was unsustainable and unnecessary, hence omitted it from the bill,” Karauri said in an affidavit.

He also argued that the President ignored the parliamentary process and indicated that the betting company wants the amendments quashed by the courts.

It isn’t the first time Sportpesa has gone to court. When the Secretary Treasurer, Henry Rotich, first introduced the 50 percent tax increase its sister company filed an appeal which Sportpesa supported.

But the judge rejected the case due to the size of the font.

Following the parliamentary review process which considered the detrimental outcomes a hefty tax would have on the sporting community, legislators chose to drop the tax.

It’s not clear what font size Sportpesa has chosen this time round.

Sportpesa to expand operations in Uganda

Members of the Uganda government are in Kenya to talk to Sportpesa about setting up an office in Kampala.

Sportpesa only recently entered the Tanzanian market and the popularity has reportedly caught the attention of the Ugandan government.

Karauri revealed the company is excited about the Ugandan betting market after a closed door meeting at Sportpesa’s headquarters.

“We are committed to supporting the development of the game in Uganda, just as we have done in Kenya and Tanzania both on and off the pitch,” he said.

The government officials have received permission from Ugandan President, Yoweri Museveni to start up a discussion between SportPesa. They want Sportpesa to come to Uganda and invest in the Uganda Premier League.

Ugandan Minister of State for Youth and Children Affairs, Florence Nakiwala Kiyingi, said the President believes Sportpesa’s investment could provide opportunities for the youth.

She added that with the same investment from Sportpesa as Kenya and Tanzania have received, Uganda football could grow exponentially.

“The talent is there, the morale is there, the demand is overwhelming but what is missing is the capital injection in football in general and branding,” she said.