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SportPesa and Betin close shop in Kenya over tax standoff

Saturday September 28 2019
By PAUL WAFULA

Betting firms SportPesa and Betin have finally thrown in the towel.

The two firms have stopped operations in Kenya and are set to send home thousands of their employees after a prolonged tax standoff with the Kenyan government.

The betting firms, which control more than 60 percent of the market share in Kenya, said separately they had resorted to take the action after the taxes slapped on the industry made the business no longer viable.

'DAMAGING IMPACT'

SportPesa, which had earlier indicated that it was coming back to business, now says it is disappointed with the decision by the Kenyan legislature to impose a 20 percent excise tax on all betting stakes.

“The tax is based on a fundamental misunderstanding by the Rotich-led treasury of how revenue generation works in the bookmaker industry. This decision will have a damaging impact on both customers and treasury,” the firm said in a statement.

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“Further compounded by the currently in-effect 20 percent withholding tax on winnings, the economic incentive to place bets will be completely removed as the taxes will deprive consumers of their total winnings,” the firm added.

It argues that this will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya.

“Until such time that adequate taxation and non-hostile regulatory environment is returned, the SportPesa brand will halt operations in Kenya,” the firm said.

On its part, Betin has sent a notice of termination to all its staff on grounds that it has not been operational since July 2019.

“Management has had several extensive meetings with relevant government entities regarding the company’s licence renewal without much success,” the firm explains in the staff memo.

“In view of the above, we have had financial constraints as you might all expect. As a result of the deterioration of the profitability, the management has had to rethink its operational model and to proceed with the exercise of termination on account of redundancy,” it added. It said it had tried to find an alternative between July and September 2019, but it has now become financially impossible to maintain the entire workforce.

“We hereby notify you that positions will be rendered redundant on 31st October 2019,” firm said.

With the shutdown of the two, more than 2,500 people who depend directly on the industry will be out of jobs in coming days as the government crackdown on the sector draws its first casualties.

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