Category Archives: Kenya

Kenyan betting operators lose court challenge of new 35% tax

kenya-betting-tax-challenge-dismissedKenya’s betting operators will have to face their new 35% tax obligations after a court dismissed a challenge of the government’s tax hike.

Kenya’s government approved a new uniform 35% tax on all gambling products this summer, despite protests from operators that the new rate made their businesses unviable. The new rate, which kicks in on January 1, 2018, marks a significant rise over the existing rates, which for betting operators had been a mere 7.5%.

In October, the Pambazuka National Lottery filed a lawsuit alleging that the tax hike was unconstitutional., given that parliament approved the hike as an item in the national budget, rather than subjecting standalone legislation to greater public scrutiny.

The suit also accused President Uhuru Kenyatta of exceeding his authority in signing the legislation, and argued that the tax imposed an unreasonable and excessive burden on the industry.

On Thursday, Kenya’s High Court rejected the challenge, saying it was within the National Assembly’s authority to approve the budget without the Senate’s involvement. The Court similarly ruled that Kenyatta had acted according to the law and that the challengers had failed to prove that the new tax lacks a public purpose.

The government justified its tax hike as a means to deter youth from getting involved in gambling. Kenyan-licensed operators countered that the new tax will ultimately be passed onto bettors, who will then transfer their betting activity to internationally licensed betting operators, thereby decreasing the government’s share of betting revenue and eliminating the government’s ability to oversee betting activity.

Justice John Mativo described taxation as “a way of apportioning the cost of government among those who in some measure are privileged to enjoy its benefits hence must bear its burdens … its imposition does not necessarily infringe on the citizens’ rights unless it is demonstrated to be outrightly arbitrary and unconstitutional.”

The Court also chided the appellants for failing to disclose that the law was the subject of a separate challenge. SportPesa filed the first lawsuit against the law in October, one week before the PNL suit.

While the suits were later consolidated into a single proceeding, Mativo claimed the “multiplicity of actions on the same matter between the same parties” was “regarded as an abuse,” since the parties “had a duty to bring such information to the court so as to help it avoid rendering conflicting decisions on the same subject.”

SportPesa is Kenya’s leading betting operator and a major financial supporter of local sports teams and associations. The company previously warned that it would be compelled to significantly reduce its sponsorship budget if the new tax was imposed. SportPesa also threatened to scrap its entire Kenyan operations if the tax went through, although it later walked back these threats. The company has yet to publicly comment on the ruling.


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Kenya betting operators win reprieve on proposed tax hike

kenya-sports-betting-tax-reprieveKenya’s sports betting operators are breathing a sigh of relief after legislators rejected plans to dramatically hike betting taxes, while retaining hikes for other gaming operators.

On Thursday, Kenya’s parliament voted down plans to hike betting operators’ tax obligations from their original 7.5% of revenue to 50%. The proposed change to the Betting, Lotteries and Gaming Act was part of the government’s Finance Bill, which sought to impose a uniform 50% tax on all gambling revenue, be it betting, lotteries or gaming.

Treasury Secretary Henry Rotich said the proposed tax hikes were intended as both a revenue generator for the government as well as a means of discouraging gamblers from going overboard. But betting operator SportPesa mounted a legal challenge based on the argument that the hikes, which were on top of operators’ corporate tax obligations, were unconstitutional.

On Wednesday, members of the Assembly’s Finance Committee rejected the tax on betting operators, issuing a report that said the rate was “punitive enough to discourage such activities.” The report was met with opposition from government representatives, who urged Assembly members to stick with Rotich’s plan for the good of society.

On Thursday, MPs voted in favor of an amendment to the Finance Bill that preserved the original 7.5% rate for betting operators. However, betting was the only vertical offered this exemption, as the new 50% tax rate will still be imposed on gaming, lottery and prize competition revenue. MPs have reportedly agreed to revisit the issue of whether to maintain the 50% rate on the other verticals next week after more discussion with the Treasury and stakeholders.

The government’s proposed tax hike had been staunchly opposed by Kenya’s sporting bodies, which have come to rely on lucrative sponsorship deals with betting operators. That said, the Kenyan Premier League (KPL) appears poised to bite the hand that feeds, based on its belief that its sponsorship deals left a lot of money on the table.

Earlier this month, SportPesa inked a shirt sponsorship with English Premier League side Everton FC. The deal, said to be worth up to £9.6m per year, was touted by the team as the biggest commercial partnership in the club’s history.

SportPesa also sponsors the KPL, as well as several individual KPL clubs. But news of the Everton deal prompted some KPL execs to believe that they’d sold themselves short when negotiating their own SportPesa deals. The KPL’s Bob Munro spoke for a number of execs when he told that the league “will have to renegotiate afresh when this contract ends.”

SportPesa CEO Ronald Karauri pointed out that the company’s UK division is completely autonomous and needs to up its visibility to compete with the major UK betting operators. Karauri said he “cannot stop [the UK division] from putting in money where they feel they will be able to achieve this.”



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SportPesa inks Hull City FC shirt offer in advance of United kingdom betting web page launch

July twenty five, 2016


sportpesa-hull-city-sponsorshipAfrican online athletics betting operator SportPesa has inked its to start with English Leading League shirt offer with Hull City FC.

On Monday, Hull City introduced that it had entered into a “multi-million pound deal” that will see SportPesa’s title and brand adorning the team’s property, absent and 3rd shirts about the upcoming a few EPL seasons. The offer implies that gambling operators now have visibility on entirely fifty percent the EPL’s twenty teams’ shirts.

Particular terms weren’t disclosed, but Tigers industrial manager Simon King called it “by significantly the largest” offer in the club’s 112-year heritage. It’s the 2nd EPL offer for SportPesa, possessing signed on as the Kenyan betting associate of Arsenal FC this February.

SportPesa says its newest offer includes a guarantee that Hull City will journey to Kenya to participate in against a regional workforce – the to start with time any EPL club has created the vacation to Kenya. SportPesa is the title sponsor of Kenya’s Leading League, as nicely as league sides Gor Mahia and AFC Leopards, and the corporation also signed on as sponsor of the Kenyan Rugby Union very last week.

SportPesa CEO Ronald Karauri called the Hull City offer a “major milestone” for his corporation as it marked “the scaling of a Kenyan brand name into the world current market.” SportPesa programs to develop into various added African markets later this year and also in the United kingdom, the place the corporation programs to launch a United kingdom-licensed betting web page upcoming thirty day period right after placing a offer with platform supplier TGP Europe.

SportPesa to start with launched functions in February 2014 and rapidly grew to become a fixture in Kenya’s betting current market many thanks to a promoting push that created it the country’s twentieth greatest advertiser in 2015. Kenya has all over 30 licensed betting operators, ten of which are available by way of online channels. SportPesa operates only by way of net and text messaging products and services.

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