Why gambling firms failed to stop new law from taking effect

The need for public participation and whether President Uhuru Kenyatta abused power in the process leading to the enactment of a law introducing a 35 per cent tax on all gambling revenues, are among the key issues that were argued in court by firms challenging the new legislation.

SportPesa and Pambazuka National Lottery had sought to stop the new law from taking effect, saying they were not adequately consulted and that the Head of State usurped Parliament’s mandate.

High Court Judge John Mativo in his judgment last month, however, declined to grant the orders sought saying there was sufficient evidence to demonstrate that there was adequate public participation prior to the enactment of the contested law.

The affected stakeholders had been engaged before the new law on higher tax was introduced. SportPesa and Pambazuka, who had filed the case had, in particular, participated in the negotiations leading to the new tax regime.

PAMBAZUKA

“SportPesa and Pambazuka also admit that there were various discussions and views from various stakeholders some of whom opposed the introduction of the taxes,” Justice Mativo said.

The judge, however, noted that public participation does not mean that views collected must prevail.

He also found no fault in the decision by President Kenyatta to return the Bill back to Parliament for further consideration on the tax.

The lottery firms had argued that the President had unilaterally, irregularly and illegally imposed his subjective will to kill the betting industry by imposing an unsustainable tax burden (35 per cent) on the industry, and thus usurping Parliament’s power and mandate.

Justice Mativo said to the extent that MPs have a constitutional safeguard and freedom of rejecting the recommendations, “I find that it would be unsafe to conclude that they were influenced by the President’s proposal.”

TAX

Kenya Revenue Authority had told the court that the tax complained is a government policy to discourage the youth from engaging in the activity.

The court found that the reasonableness of the policy had not been questioned by the gaming firms. Equally, no evidence of abuse of the tax policy was demonstrated before court.

The judge said that it is in public interest that taxes must be paid and that the contested legislation does not infringe on SportPesa and Pambazuka’s right to property as they have alleged, but it is aimed at serving a legitimate public interest.

OBTAIN ORDERS

The National Assembly’s lawyer had told court that the two companies had abused the court process, arguing they share directors and after failing to obtain interim orders in a separate case, without disclosing to court that there was an existing petition, filed a second petition in which they obtained temporary orders restraining KRA from demanding the contested tax which was coming into effect from January 1.

Justice Mativo said the fact that the two companies share directors made it absolutely necessary for them to disclose to the court the existence of the first petition, and leave the court to decide.