On Wednesday, the Association of Gaming Operators of Kenya (AGOK) derided what they called an unsustainable 35 per cent tax on their gross income that has now put 10,000 jobs in jeopardy. It has been an eventful few weeks for the betting industry, first with Pambazuka announcing that it was suspending its operations in Kenya after payment of all prizes in April.
Both Pambazuka and SportPesa had separately sued entities of the government of Kenya on the grounds that the Betting Lotteries and Gaming Act was unconstitutionally passed. It was, they said, an illegitimate law that had not been approved by the Senate, and there was no public participation on the 35 per cent tax, which they said the President had arbitrarily set, in abuse of his executive power.
But a judge consolidated the two cases and dismissed them, ruling that the government could set taxes as a deterrent. The decision prompted SportPesa to immediately cancel local sports sponsorships worth Sh600 million, and Pambazuka followed with a more drastic move to suspend a business in which they said they had invested Sh2 billion in the lottery and employed 500 people since 2016.
But even as these companies pull out, there has been no abatement in their push to draw in more customers. Half of newspaper sports pages are still taken up by sports betting advertisements, and there are still billboards and TV advertisements, and sponsorships of sports news shows and segments by betting companies.
We are yet to hear from other companies, such as Betin, BetYetu, Betika and M-Cheza, on the tax. Betin has ubiquitous advertisements featuring Kenyan soccer star McDonald Mariga and is in a push to sign up new partners and betting shops.
At the Sports Personality of the Year Awards (SOYA) on Friday, Deputy President William Ruto was categorical that payment of taxes was non-negotiable, and that the government had set aside a Sh500 million fund to cater for any sports sponsorship gaps, a position that is familiar to athletes’ ears.
FUNDING FOR YOUTH SPORTS
Sports officials in the government could probably argue that the country has achieved a lot in the sports world, mainly in track and field for 40 years, whereas betting companies have been around for only three years.
Multinationals and local corporations have also supported many sports over the years, such as the Safari Rally and regional sports tournaments. There was even a time when corporations like Kenya Power & Lighting Company and Kenya Posts & Telecommunications (as the companies were called then) would sponsor the showing of English soccer finals on the Voice of Kenya television and radio channels.
One place funding needs to go is schools and youth sports activities and arts. There are dozens of sports, such as swimming, tennis, cricket, motorsports and badminton, as well as youth-level competitions in all sports that deserve a funding push. In fact, there is international funding given to Kenyan from global associations to promote, equip and sponsor school and youth sports activities, including full sponsorship to attend and participate in international tournaments.
POOR MONEY MANAGEMENT
But the problem that all sponsors face is the poor management of the sports funds and opportunities, through officials of local federations and associations. Soccer, athletics, swimming and cricket had the same officials for decades who avoided accounting for the millions of shillings.
The 2016 Olympics in Rio, Brazil, where Kenya demonstrated some of its greatest sporting achievements, is instead remembered for the numerous scandals of stranded athletes, government joyriders, missing uniforms and mistreatment of Kenya’s sports stars.
Others could argue that betting companies picked on sports that had a large capacity to absorb their funding, such as the national soccer and rugby teams. Sports betting companies are supposed to fund sporting activities. The government has no say in this, so it has decided to just grab their 35 per cent share, and purport to create its own fund that will support sports.
AGOK agreed that betting by minors is an issue of concern for the country, and some critics of betting would see the irony, in that the same companies that they feel are impoverishing young men and women would also want to champion and promote youth sports.
Kenyans have been winning in different sports since the 1960s and they continue to thrive without much support even as they do a lot for the county’s image. Julius Yego and Chris Froome emerged from nowhere, and dozens of world champions train and hone their skills at Lorna Kiplagat’s High Altitude Training Centre in Iten, all while renovation work on the government’s Kipchoge Keino Stadium in Eldoret appears to have stalled again.
Ultimately, the battle over who is a better sponsor of sports should lead to more debate and resolution in the management of the money that flows through all sports every year.