SportPesa CEO says taxation isn’t a form of regulation

SPORTPESA has announced it will continue to operate in the Kenyan sports betting market, despite the country’s lawmakers enforcing a uniform tax hike next year.

In an interview published in the Daily Nation, SportPesa Chief Executive Officer, Ronald Karauri, said that “SportPesa is not going anywhere”.

The popular Kenyan sportsbook announced earlier in the year that it would be exiting the country’s gambling market if the government went ahead with the tax increase on gaming operators.

The tax increase, which was initially 50 percent before being scrapped completely and then reintroduced at a 35 percent rate, will affect bookmakers, gambling firms, lottery companies and competition operators alike.

SportPesa announced it would be ending all sponsorships with Kenyan sporting entities and exiting the market from January 1, 2018, after President Uhuru Kenyatta signed the tax hike into law in June. The President claimed it would help tackle the country’s societal gambling issues.

However, a global expansion has meant the company will continue to operate in Kenya.

“We have gotten our feet in Italy, England and even Spain,” Karauri told the Daily Nation.

He explained that shutting down Kenyan operations no longer makes sense, despite the tax increase from 7.5 percent to 50 percent in the new year.

He raised the issue which is plaguing gambling industries all around the world, stating that prohibition pushes punters to sites located in foreign countries.

“Sometimes it looks like the government wants to kill betting completely,” he said.

“But if that is how they plan to do it, then there is a lot of misinformation.

“I appeared before the Parliamentary Committee and told them ‘look, if you increase that tax, you will not kill the business, you will only take it offshore.

“As we speak, there are people who are placing bets on foreign sites like Bet365, so I advised them to come up with more effective ways of regulating betting.”

Karauri explained that regulation is not the issue; it’s that the government believes increasing the tax rate is an effective way to regulate the industry.

“If you look around, there are gambling machines and sites cropping up even inside residential areas every day,” he pointed out.

“Do they pay tax? They don’t.

“So if you place the tax burden on SportPesa, who are supporting various sports bodies locally, and then they run out of business after three years and close shop, leaving the other unscrupulous individuals operating without licenses and without paying taxes, have you succeeded in regulating the industry?”

While Karauri has confirmed the company will continue to operate in Kenya, he said he is still hopeful that the government will revoke the tax hike “between now and December 31”.

The CEO of the sports betting company, which also has operations in Tanzania, South Africa, Isle of Man and the UK, also slammed the notion that Kenyans are irresponsible gamblers during the interview with the local Kenyan media outlet.

“There is nothing bad about betting. Many of the stories you hear are made up, without any tangible proof,” he said, referring to the articles which blame gambling for social problems.

“When we say that Kenya is a gambling nation, we mean that Kenyans are irresponsible people who cannot control themselves.

“That is underestimating Kenyans.”