Oct10
453 People Lose Jobs After SportPesa Closes Kenyan Operations
October 8, 2019 Kristina Vujadinovic
After closing its operations in Kenya, SportPesa announced that it has made its 453 local employees redundant. It is emphasized that the company has urged the country’s authorities to repeal the 20% excise tax rate on all stakes which was the reason for its withdrawal from the market.
For many months, the operator had been in the midst of a long dispute with Kenyan operators about different taxes. It dates from July, but it seemed like two parties were ready to reach an agreement after what a SportPesa spokesperson described as “positive discussions with the Kenyan Revenue Authority” in late August.
However, the happenings in the following months have shifted the table.
The Kenyan Parliament’s Finance Committee proposed a new 20% excise tax rate on betting stakes in the 2019/20 budget on the 19th September. It is an increase from the 10% stake which the treasury proposed in June.
On 25 September, MPs voted the budget through, including this new 20% tax.
After that announcement, SportPesa released a statement that it would not operate in the country until the rate is changed.
Definite Withdrawal from the Kenyan Market
Staying true to its decision, the brand confirmed its withdrawal from the country’s gaming market until further notice and change of taxes. It also explained that the closure of its business meant that all of its employees in Kenya would be laid off – an action that Kenyan authorities were fully aware of.
“We regretfully closed our operations in Kenya as a result of a long-running hostile regulatory and taxation environment in the country. This included a recent decision by the Kenyan legislature to impose a 20% excise tax on all betting stakes, which is based on a fundamental misunderstanding by the Kenyan treasury of how revenue generation works in the bookmaker industry.
Such taxes render the betting sector in Kenya commercially unviable. As a result, we have been forced to make 453 employees in our Kenyan operations redundant, which was an extremely difficult decision for the company to take,” said a SportPesa spokesperson.
The voted 20% excise tax rate on betting stakes is a double increase from the 10% stake proposed by the treasury in June.
New Tax May Result in Significant Loss of Tax Revenues
The spokesperson of the company adds that the new climate that’s government is creating isn’t beneficial to anyone.
To recall, in August, Kenyan president, Uhuru Kenyatta, called upon the country’s lawmakers to a total ban on gambling in the country, which shook up the industry. Such a ban never was voted, but the new taxes are creating unsuitable conditions for regulators to conduct their operations.
Through layoffs, the new tax will end up resulting in a significant loss of tax revenues for the Kenyan government, by the spokesperson’s opinion.
“This means that in addition to the billions of Ksh in lost government revenues that will result from the closure of betting companies’ operations, the livelihoods of taxpayers across the country are also now directly impacted, as are the many individuals that they themselves may privately employ, such as domestic staff.
The economic and social impact of the government action, therefore, continues to be felt by Kenyan business and Kenyans themselves, with many individuals now without employment and the important social investment in grassroots sports delivered by betting companies now under threat. We urge the Kenyan government to reconsider its current agenda,” adds a spokesperson for SportPesa.
Source:
“SportPesa lays off 453 after closing Kenyan operations”, igamingbusiness.com, October 4, 2019.
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Oh great, now other operators will follow its lead. Understandable, since the tax is too high. Black market, here we come! Make some room for Kenyan players…