12 Million Kenyans Given 48 Hours to Withdraw Funds as Government Shuts Down Betting Industry
Posted on: July 12, 2019, 06:31h.
Last updated on: July 12, 2019, 11:28h.
A tax fight between the Kenyan government and the country’s multimillion-dollar betting industry escalated suddenly on Wednesday as the government took the most drastic option available.
Kenya’s Betting Control and Licensing Board has ordered telecommunications companies to effectively dismantle the industry by eradicating the short codes and paybill numbers that underpin it. Some 27 betting companies are targeted in the crackdown, including industry leaders like SportPesa, Betin and Betway.
Bettors have 48 hours from the order, issued late Wednesday, to withdraw their funds. Those who don’t by Friday evening’s deadline will lose every penny.
Rise of Kenyan Betting Market
Sports betting has taken many African companies by storm in recent years, fuelled by enthusiasm for wagering on European soccer, as well as local teams.
In countries where many people do not own bank accounts, the industry relies almost entirely on mobile e-wallets, operated by the telecommunications companies. Gamblers load money into the wallets to place bets and collect their winnings by the same method.
Sportspesa is a homegrown company and is also Kenya’s biggest sports betting operator. It announced itself to the wider world in 2017 by flexing its financial muscles with a jersey sponsorship deal with EPL soccer team Everton. It was the biggest deal in Everton’s history. Sportspesa also sponsors the Kenyan Premier League.
According to Price Waterhouse Coopers, Kenya is the third largest African online sports betting market, after Nigeria and South Africa. A 2017 GeoPoll Survey found the country had the highest number of people in sub-Saharan Africa between the ages of 17 to 35 who gambled frequently.
Some 12 million Kenyans are believed to own betting wallets, according to The East African, but the amount of money held within these wallets is unknown.
In response to concerns about gambling addiction, the government raised taxes on the industry to 35 percent in 2017, but it believes the betting companies aren’t paying the full whack.
The government says the combined revenues of Kenyan-facing companies is $2 billion but the industry only paid around $40 million in taxes last year. In April, it threatened to revoke licenses of by July 1, unless the companies were able to prove they were tax-compliant, operating within the law, and had sufficient liquidity.
But the industry claims the government is way off the mark in its estimate of their revenues and that it makes nowhere near $2 billion.
None of the companies affected had issued a statement by Friday morning but sources told local news outlet Capital FM that they were considering legal action to block the shutdown.
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