Irony of turmoil in sports and betting

An African cartoonist neatly summed up the irony surrounding SportPesa’s withdrawal from the Kenyan sporting scene with a sketch of a skinny woman clinging onto a huge rotund man and beside them, a suit-wearing man holding out an empty bowl.

The thin lady represents the emaciated Kenyan sporting scene that has reduced sports administrators to beggars of sponsorship.

The fat man has SportPesa written across his belly, indicating that he represents corporate sponsors with their enchanting money and frivolous spending.

The man in the suit is the state, which has vowed to tax the duo’s blossoming relationship to its untimely demise.

Such is the discourse that has pervaded local sporting circles since SportPesa, the Kenya-based online betting giant, made good its threat to withdraw its support for local sports entities after the government enacted a new tax of 35 per cent on betting firms.

As expected, their withdrawal elicited hue and cry among sports administrators who had previously enjoyed healthy sponsorship. Gor Mahia and AFC Leopards have threatened to withdraw from continental competitions due to the anticipated cash crunch after losing their multi-million shirt SportPesa shirt sponsorship.

What was unexpected, however, was the sharp criticism that the company has attracted since they made public their decision.

Public opinion appears unanimous in the feeling that SportPesa is using blackmail to force the government to reduce the new tax that took effect on January 1.

It is a situation that will obviously impact hard on Kenyan sports considering that SportPesa has for the last of couple years been the major benefactor of the big sporting disciplines in the country.

A lot has happened in the last few days, including SportPesa’s notice to appeal the High Court decision that approved the implementation off the increased betting tax. Now, Nation Sport has reliable learned that the company has opened fresh negotiation with the Kenyan Premier League club Gor Mahia with the view of working out a new shirt sponsorship deal.

“I asked the President to engage with me so as to come up with a solution to this. I would also like to meet the cabinet secretaries for sports and finance and see how we will come up with solutions to the negative impact brought about by the new finance law,” said SportPesa CEO Ronald Karauri.

“I further request the government to help Football Kenya Federation pay the Technical Director’s salary and that of national team coach Paul Put. Besides, I ask the government to assist the league to kick off without delay and help Gor and AFC Leopards honour their continental matches. We (SportPesa) would be glad to be back should the government re-think the financial law.”

It remains to be seen whether government will heed SportPesa’s call, or whether the company will restore their agreements with Kenya Rugby Union, Kenyan Premier League and other sports entities that were affected by their withdrawal, but like anything involving gambling, appearances can be deceiving.

“There is a reason why the betting tax was increased. It was not just a decision by the Government. It is something that was discussed at length in Parliament so I don’t think we should be looking at changing the new law. We shall however engage the stakeholders to see how best to navigate this matter,” said Sports Principal Secretary Kirimi Kaberia.

So what is the truth about betting? And betting tax? And is it right to effect punitive sin taxes on revenue generated from betting? And why is government so rigid about the increased tax regime? And why are SportPesa crying foul while they are subjected to even higher tax percentages in the United Kingdom?

Governments look at gambling differently.

In Russia, for example, it is viewed as an activity with the potential to boost a country’s economy while in Germany it is regarded as harmful past time with the potential to ruin the work force.

Gaming taxes thus differ greatly from one country to another.

In the UK for instance, where SportPesa has partnerships with three clubs, only the gross income of betting companies is subjected to a tax of up to 50 per cent. The same applies to Czech Republic, Belgium, Slovakia, Spain, and Denmark.

This means that SportPesa UK remits almost half of their gross earnings as taxes, which begs the question is the company is being genuine in its cry for reduced taxation in Kenya?

SportPesa officials have repeatedly stated that EPL clubs are supported fully by money realized from the UK market, but questions linger on why the company effected an immediate and total withdrawal of support to local sports due to the 35 per cent tax regime while they remain in the UK market.

A recent article on casino.org last week stated that SportPesa spends $5.8m (about Sh599 million) in Kenya and $12.5m (Sh1.3 billion) on Everton.

SportPesa will be saving some Sh600 million by withdrawing from Kenyan sports.

If you collapse the figures of the company’s  expenditure in England, it is likely that they have committed over Sh2.5 billion on Everton, Arsenal, Southampton and Hull City.

That is just a little more than five times more than it spends on all Kenyan sports.

SportPesa, however, are not the only betting firm with a shirt sponsorship deal in the EPL.

Nine out of the 20 clubs in this most popular football league in the world are sponsored by betting companies.

Other top European leagues including England, France, Germany, Italy and Spain have the same or an even higher percentage of clubs sponsored by betting companies.

In Kenya the number is five clubs from the 18 Kenyan Premier League clubs.

Betting firms and sports are here to stay, at least for now.