Kenyan Online Betting Operators Sportpesa and Betin Sue Government Over Industry Shutdown

Posted on: July 22, 2019, 09:41h. 

Last updated on: July 22, 2019, 11:15h.

Kenya’s top two online betting companies, Sportpesa and Betin, have initiated legal action against the country’s government and biggest telecommunications provider, as they push back against the state’s dramatic shutdown of the industry.

Sportpesa CEO Ronald Karauri has denied government claims that his company has not been paying its fair share of taxes, even going so far as to publish the company’s finances in national newspapers. (Image: Ronald Karauri/ jolygram)

Earlier this month, the state ordered Kenyan telecoms giant, Safaricom, to block M-Pesa pay-bill numbers and SMS short codes for 27 betting companies, including Sportpesa and Betin.

In a largely unbanked society, the online gambling industry is sustained by the M-Pesa e-wallet, which allows Kenyans to load money onto their phones and make digital transactions. The operators rely on the pay-bill numbers and short codes allocated to them by Safaricom-owned M-Pesa to facilitate deposits and payouts.

On July 10, Kenya’s Betting Control and Licensing Board (BCLB) announced some 12 million Kenyans had 48 hours to withdraw their funds before Safaricom switched off the codes.

The government took the nuclear option after it claimed the betting industry had not been paying its fair share of taxes, an allegation the industry denies.

Imprison Regulator, Says Sportpesa Suit

And now it’s fighting back. Last week, Sportpesa and Betin filed lawsuits against the government, arguing that the shutdown was illegal because they both had court orders allowing them to continue their operations, despite the state refusing to renew their licenses at the beginning of the month.

Their complaints ask for the suspension of pay-bill numbers to be lifted and calls for the chairman of the BCLB to be fined or imprisoned for ordering the shutdown, in violation of a court order.

Additionally, SportPesa is suing the government for compensation for earnings lost since the numbers were switched off.

Now, Betin has also filed suit against Safaricom, demanding the company switch the pay-bill numbers back on.

“The interested party [Safaricom] be directed to refrain from giving effect to or acting on any directive by the respondent [BCLB] in relation to the applicants pay bill account numbers pending the hearing and determination of this application,” reads the complaint.

The government contests that the 27 companies have failed to meet regulatory requirements and have withheld money that should have been paid to the government in taxes.

But last week, Sportpesa took out a full-page advertisement in several newspapers disclosing its finances to the public, while also highlighting its commitment to social responsibility and voluntary funding of domestic sporting and agricultural programs.

Directors Expelled

Also last week, the Interior Ministry ordered the expulsion from the country of 17 foreign directors of Kenyan-facing gambling companies. The names of the executives targeted were not disclosed, although sources who spoke to Kenya’s Daily Nation newspaper said they included Bulgarian, Italian, Russian, and Polish nationals.

The widespread adoption of mobile phones in Africa over the past few years, and the rise of e-wallets like M-Pesa, has created a gambling boom in many nations, which has led to concerns about the social costs. Kenya is the third biggest market in Africa, after Nigeria and South Africa.

In 2017, a GeoPoll Survey found Kenya had the highest number of people between the ages of 17 to 35 who gambled frequently.