alexa Betting firms living on borrowed time after licences halted - Daily Nation

Betting firms living on borrowed time after licences halted

Tuesday July 9 2019

sports betting

A football fan engages in sports betting. Some 27 betting and gaming companies are living on borrowed time after their licences were deferred or cancelled. PHOTO | FILE | NATION MEDIA GROUP 

JUSTUS WANGA
By JUSTUS WANGA
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VINCENT ACHUKA
By VINCENT ACHUKA
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Some 27 betting and gaming companies are living on borrowed time after their licences were deferred or cancelled following findings by a multi-agency board.

The Nation has seen the list of the affected firms that had been kept secret since the government announced last week that it would not renew the licences of 19 companies and had deferred the renewal of permits for eight others, 13 casinos and six lotteries.

All betting firms were supposed to have had their licences renewed by July 1.

DEPORTING BOSSES

One of the big companies on the list, Betin, whose licence the Betting Control and Licensing Board refused to renew, has gone to court seeking to reverse the decision.

The Nation has also learnt that the government is mulling deporting the bosses of betting firms whose licences were not renewed as it widens its crackdown on rogue operators in the multibillion-shilling gambling industry.

The government is taking the matter so seriously that it is now being handled by the country’s top security organ, the National Security Advisory Committee.

The committee was at the weekend analysing all the companies with a view to advising the Attorney-General and Interior ministry on the way forward. This is happening as the Department of Immigration finalises the list of firms whose directors would be deported.

“The exercise is highly sensitive and divulging any information may result in the whole exercise crumbling. For now, all I can tell you is that the Presidency has given us the green light to deal with the industry of gambling that is now turning into rogue outfits,” a highly placed source told the Nation.

Firms whose licences have not been renewed or which have been told to fulfil certain conditions in order to be allowed to operate are betting giant SportPesa, Betin, Betway, Betpawa, Premierbet, Lucky 2 U, 1X Bet, Mozzartbet, Dafa bet, World Sport Bet, Atari Gaming, Palmsbet and Betboss.

TOUGH DECISION

Also on the list are Betyetu, Elitebet, Bungabet, Cysabet, Nestbet, Easybet, Kick Off, Millionaire Sports Bet, Kenya Sports Bet and Eastleighbet.

SportPesa, Betin and Betway control at least 85 per cent of the market.

We reached out to the management of some of the firms for comment, but none was forthcoming. “I have no comment about that,” said Mr Leon Kiptum, the Betway country manager.

When contacted for comment, Interior Cabinet Secretary Fred Matiang'i said all these companies ought to cease operations, a tough decision that could throw the entire industry into a spin.

A spot check, however, showed that the websites of all the firms were operational by the time of going to press.

Among the conditions that all companies had to meet before having their licences renewed is to be tax-compliant. They were also expected to prove that they had been operating within the law, and prove that they are sufficiently liquid and have performed financially well for the past four years.

LICENCE

For the 19 whose licences have not been renewed, the National Security Advisory Committee is reviewing their cases individually and will advise the Interior ministry in the coming days.

“There is no law that compels a government to issue a licence to any investor,” Dr Matiangi said. “Our decision is going to shake the sector for sure, but we have reached a point where we have to save our country.”

“Our country has to learn how to live truthfully. Otherwise are we going to tell our children that there is no reason to work hard because you can just spend Sh20 and become a millionaire?” he asked.

What shocked the Betting Control and Licencing Board (BCLB) during the vetting is that the companies made a cumulative Sh204 billion last year but paid only Sh4 billion in taxes.

It also emerged that up to 500,000 of the young people blacklisted by credit reference bureaus took mobile money loans to bet.

Most of the companies also failed to remit the 20 per cent withholding tax on payouts. Additionally, a good chunk of the revenue made was wired to accounts abroad, courtesy of the ownership structure of the industry, which is 90 per cent owned by foreigners or companies registered in tax havens.

A search by the Nation at the Registrar of Companies shows that the Kenyans who are directors of most of the betting companies blacklisted by the Interior ministry mostly own zero shares.

Asian Betting Ltd, which operates as Dafabet, has three directors — Louis Watts, Cary Underwood and Lina Kantaria. But Mr Watts and Mr Underwood, who are foreigners, own a cumulative 100,000 shares while Ms Kantaria, a Kenyan, owns zero.

ZERO SHARES

Gamcode Ltd, which operates as Betin, has four shareholders — Domenico Geovando (Italian), Leandro Giovando (Italian), Jophece Yogo (Kenyan) and Mauritius-based Samson Capital Investments Ltd. Jophese Yogo, the only Kenyan director in the company, owns zero shares.

Premier Betting Kenya Ltd, which operates as Premier Bet, has Editel Sarl Ltd (a foreign company) plus Francis Galleri and Alan Galleri as directors.

The ownership structure of these three companies is replicated in the entire industry, whose Sh200 billion annual revenue is more than twice the Sh82 billion the government is spending this year on universal health.

A 2017-2021 gambling outlook report by PwC shows that the yearly turnover of the sports betting industry in Kenya will reach Sh500 billion by 2020. As it stands, Kenya has the third-largest betting market in Africa after South Africa and Nigeria.

GAMBLERS

But a Geopol survey released in December last year noted that 40 per cent of the low-income gambling consumers are unemployed while 29 per cent are students. To many, it has turned from an obsession or a mere game to an income-generating activity.

“Once you try and win or if you know of someone who has won, you get a psychological impetus that if you try even after losing so much money, there is a chance that you will still win,” says Dr Philomena Ndambuki, a psychologist and director of mentorship at Kenyatta University.

On Tuesday last week, Betin went to court seeking orders to suspend a decision by the Interior ministry not to renew its licence. High Court Judge Weldon Korir suspended BCLB’s decision of July 1 to deny Gamcode Ltd a chance to renew its license.

“A conservatory order be and is hereby issued staying or suspending the effect of the betting board’s decision of rejecting the applicant’s application for the renewal of its 2019/2020 Bookmaker’s license, until July 16,” ruled the judge.

Additional reporting by Maureen Kakah