Self-regulation option for gaming industry

Friday January 12 2018

A football fan participating in online sports betting.

A football fan participating in online sports betting. PHOTO | SALATON NJAU | NATION MEDIA GROUP 

By FELICIA SOLOMON

The success of the online sports betting companies in Kenya has made the gaming industry a sweet target for the government with regard to taxation at the primary level and problem gambling at a secondary level.

The new 35 per cent monthly tax on betting revenue, gaming revenue, lottery turnover and gross turnover for prize competition, up from 7.5, 12, 5 and 15 per cent, respectively, took effect on January 1. The gaming firms, particularly SportPesa and Pambazuka National Lottery, have negatively reacted to the new law, with the former withdrawing its sponsorship of local sports and the latter suspending its operations.

Whether the government will baulk at this reaction is yet to be seen. However, considering how it has responded to the sulking of the bankers over the interest rate cap, the gaming industry should probably adopt a different strategy.

Given that the reason cited for the increased taxation is based on alleged negative social effects of gaming, the industry can adopt self-regulation to counter this State intervention.

FINANCE BILL

Instructively, before the 2017 Finance Bill (now Finance Act 2017) was introduced in the National Assembly, MPs were debating the Betting, Lotteries and Gaming (Amendment) Bill, 2016 — sponsored by Jakoyo Midiwo — which not only proposed higher taxes but also a raft of changes to the Betting, Lotteries and Gaming Act to deal with problem gambling.

That included a higher age limit for gambling, extensive self-exclusion, restrictive advertising and discounting, cap on winnings, online betting cap, stringent registration requirements for online gamblers, limits on mobile phones in online gambling, local shareholding requirements and limited gambling hours. This would have greatly hampered the ease of providing and taking part in gaming.

It is, therefore, high time the industry changed tack. One strategy it can adopt is to voluntarily deal with the perceived negative social effects.

It could undertake a unified approach to promoting responsible gambling. That would help in addressing the state’s publicised concerns and enhance the firms’ social responsibility endeavours.

SET RULES

They could do this through a third party. That could take the form of a trust, society, association or any other. Members would include industry players and government officials. South African gaming companies have adopted this approach.

The industry could also set rules and regulations to deal with problem gambling. These could include provision of information on responsible gambling messages and warnings, self-exclusion or exclusion and assistance, counselling services and filtering systems, as well as condemnation of underage gambling.

Others are self-exclusion from 3-6 months to five years, daily deposit limits, player history, staff training, warnings, protection of minors, filtering systems, advertising and marketing standards, game and machine design and assistance and counselling.

BALANCED APPROACH

Notably, there has been no comprehensive review of the socio-economic impact of gambling to ensure a balanced approach to its regulation in Kenya. As such, there is no reference point for the negative social effects claim and the proposals seem to be motivated by politics and emotions.

A good starting point to self-regulation is for industry players to undertake a comprehensive study of the socio-economic impact of gambling in Kenya.

The gaming industry should take the reins in promoting responsible gambling. Whilst we are yet to see whether the current strategy will work, it may be prudent for the industry to look ahead and start controlling its future.

Ms Solomon is the head of legal and regulatory affairs at Oxygene Marketing.