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Gaming firms fault State order as economic shock waves loom

PD Reporters @PeopleDailyKe

The implementation of a directive by the betting regulator appeared to falter yesterday even as betting firms cried foul, saying their businesses were being unfairly targeted by the very government that issued them with licences to operate.

This follows the suspension of the operations of 27 betting companies throwing a spanner into the works of an industry estimated to have achieved a combined revenue of Sh200 billion in 2018.

A spot check by People Daily with at least four gaming companies revealed that gamers could still deposit and withdraw money in their betting wallets and place bets.

Earlier in the week, Betting Control and Licensing Board (BCLB) issued a statement revoking the licences of 27 betting firms for one form or another of non-compliance to licensing and taxation requirements.

The order was quickly followed by a directive to telecommunication companies to shut down pay bill numbers and short codes for the mentioned companies dealing a final blow to the operations of the gaming firms.

Responding to the directive, SportPesa – the market leader in gaming business – maintained that they were tax compliant and that they were working to solve the matter amicably.

“SportPesa is a law abiding corporate citizen that upholds all tax and regulatory requirements. We remain compliant on all tax payments. We continue to address the licensing matter with industry regulators and stakeholders,” said Jean Kairie, corporate affairs director at SportPesa.

“In the meantime, the High Court has issued an order that allows SportPesa to continue operations uninterrupted until the matter is resolved and therefore all our pay bills and other services remain operational.”

Multi-billion-shilling

If implemented, the directive by BCLB will cripple the operations of the betting companies in the multi-billion-shilling industry with SportPesa even poking holes into claims that betting firms were raking in Sh200 billion against tax remittances of Sh4 billion, asserting the figures are exaggerated.

Financial statements of Pevans East Africa Ltd which runs SportPesa shows it earned Sh20 billion in the year ending December 31, 2018 and shelled out Sh6.3 billion in taxes, saying government figures don’t add up since the Sh200 billion annual revenue it claims was still out of reach for the betting firms.

MozzartBet released a statement  saying that it is not aware of non-compliance concerns amid purported suspension of its operating licence saying it had no issues with relevant regulators and that they had no pending issues with BCLB.

“For avoidance of doubt, Mozzartbet has a valid and current tax compliant certificate,” said marketing director Frank Ochieng.

Safaricom said in a statement that it would need further guidance to close the Pay Bill numbers because two betting firms – SportPesa and Betin – had secured court injunctions over the matter.

Safaricom also said closing pay bills would be going against the law as such a decision would mean individuals with money in betting wallets would not have access to their funds.

“The directive to shut down paybill, SMS and short codes will no doubt deny gamers access to their funds,” said the statement from Safaricom’s lawyers TRIPPLEOKLAW.

Wallet accounts

It is approximated that there are over 12.5 million betting wallets—as almost all betting is done exclusively through mobile phone transactions—that stand to be affected by the directive if implemented. It is not clear how much the wallet accounts hold but it is also estimated to run into billions of shillings.

Also on the spot – if the new directive is implemented – are thousands of betting shop owners and operators where gamers go to claim their wins.

On the flip-side, the government stands to lose tax revenues with sports sponsorship deals suffering cancellations as they are mainly facilitated by the main betting companies.

The directive to suspend the operations of 27 betting companies is a culmination of a series of bac-and-forth between the betting companies and the Government.

The government, Kenya Revenue Authority on the one hand and the gaming firms on the other have been at loggerheads over licensing, advertisement and the level and payment of tax for over two years now.

While the Government insists that gambling is a social vice that needs to be tamed as it is highly addictive and is affecting the youth, betting companies are also a source of tax revenue that the government so much needs.

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