CEO Karauri says the company cannot sustain existing sponsorships.
The question of just how much money SportPesa is making from gaming activities Tuesday came to the fore as the giant betting company made good their threat to withdraw its commitment to all local sponsorships.
SportPesa chief executive officer Ronald Karauri faced a salvo of questions from journalists wanting him to address the common belief that the company is making obscene profits, especially in the Kenyan chapter, hence the need to increase the tax rate.
Karauri, who cut a dejected figure as he delivered the news of their decision, deflected by saying that it shouldn’t be about how much money the company makes, but about whether or not it can “continue to sustain the existing sponsorships under the new tax law.” He also clarified boldly that the company will not be withdrawing its operations in Kenya, although he noted that a restructuring of its marketing budgets is now inevitable.
“To end all speculation, we have effectively cancelled all sponsorships with Football Kenya Federation, (Harambee Stars coach) Paul Put, (assistant coach) Andreas Spiers, Kenya Premier League, Kenya Rugby Union, Gor Mahia, AFC Leopards, Nakuru All Stars, Boxing Federation and the Super 8 grassroots tournament,” he said.
Karauri said that contrary to media reports, no government official had reached out to him for consultation, and he issued a passionate appeal to government to rethink the matter.
“The Sports Fund is a good idea, but in no country in the world has a government been able to support sports entirely. We hope the government will sufficiently manage the funds and propel sports to the next level.
“I still believe there is hope, and as the chairman of the Association of Gaming Operators in Kenya, I request government to sit down with me so that we can come up with a more amicable solution,” he said.
The withdrawal from sponsorship takes effect immediately, as clubs had already been issued with notices of intent to withdraw in June last year.
SportPesa are major partners of national sporting bodies Kenya Rugby Union, Football Kenya Federation and Boxing Association of Kenya.
They are also shirt sponsors of the glob-trotting Kenya sevens rugby team and official partners of top football clubs Gor Mahia (Sh300 million over five years) and AFC Leopards (Sh225 million over five years). SportPesa are also the official sponsors of National Super League side Nakuru All Stars and their withdrawal will particularly hit the Kenyan Premier League hard, as the already struggling league clubs will have to take huge cuts in their annual grants.
The company’s withdrawal has been precipitated by a High Court ruling delivered by Justice John Mativo last week upholding the new tax laws that require betting, lotteries and gaming to pay 35 per cent tax.
The Bulgarian-owned company has, however, issued a notice to appeal against the High Court’s judgment, saying that the increased tax rate is in breach of Article 201 of the Constitution which demands the public finance system promotes an equitable society where the tax burden shall be shared fairly.