Sports betting company Sportpesa’s decision to withdraw its sports sponsorship and scaling down its activities in the country should not only be a cause of concern to teams it has been supporting but to all Kenyans.
The company’s move – in protest against the increase of taxation on sports gaming enterprises to 35 per cent – is likely to have far-reaching repercussions on the sporting industry, the economy and even worsen the unemployment problem. Ironically, it may even affect tax revenue, particularly if companies choose to disinvest and move to investment destinations that have friendlier taxation regimes.
Following a tough year which has taken a significant toll on the economy, the country needs the contribution of every player to recover. The Sportpesa situation does not help in any way. Yet the situation need not have been allowed to reached this stage.
Had the stakeholders given dialogue and the spirit of give-and-take a chance, it is possible that a solution would have been found. But thanks to intransigence on both sides, it has come to this. Sports clubs that have been benefiting from the betting company’s sponsorship will no doubt bear the brunt of the withdrawal.
After years of being in financial dire straits which greatly affected performance, Sportpesa’s sponsorship was a welcome shot in the arm for the beneficiary clubs. Unless reason prevails and the sponsorship is restored, the clubs’ future hardly looks bright.
The withdrawal is expected to have immediate and long-term impact on activities, plans and development of sports clubs. Activities scheduled for the next few weeks and months are likely to be thrown into disarray while long-term plans are shelved until another steady source of income is found.
Also facing an uncertain future is the entire sporting industry. Besides mismanagement, inadequate funding has greatly contributed to poor development of various sports in Kenya. The policy should be to encourage entities that offer the much-needed resources.
Taxation policies that negatively affect sponsors can only drive away funding. This is also an indictment to the country’s taxation policies and laws and the people behind their implementation.
While Parliament was motivated by a desire to regulate what is considered an unhealthy gambling culture in the country when it passed the new law on gaming taxes, it should have considered the bigger picture.
Legislators ought to have struck a balance between controlling betting and ensuring other interests including sports sponsorship, employment and the economy are not adversely affected. Luckily, it is not too late to reopen dialogue and reach a compromise where no one loses and everyone is a winner.