The fate on Kenya’s top sports teams and competitions now hangs in a balance after leading gaming firm SportPesa on Thursday failed to block the implementation of increased taxation on gaming.
SportPesa had earlier threatened to withdraw their sponsorships should the new tax laws on gaming be upheld.
“The multiplicity of actions on the same matter between the same parties even where there exists a right to bring the action is regarded as an abuse,” said High Court Judge John Mativo on Thursday in his ruling that dismissed SportPesa’s appeal.
Even though the two firms filed their cases separately, before they were later consolidated into one, the judge pointed out that the suits simply arose from the same set of facts and circumstances hence sought similar reliefs.
“Even where a party brings a case to the court and is aware of the existence of similar or previous litigation, the party has a duty to bring such information to the court so as to help it avoid rendering conflicting decisions on the same subject,” said Justice Mativo.
Pevans East Africa Limited, which owns SportsPesa and Bradley/Pambazuka National Lottery, had sued the Betting and Control Licensing Board, Interior and Finance Cabinet Secretaries, Kenya Revenue Authority’s Commissioner General, the National Assembly, Speaker of the Senate as well as the Attorney General. The National Sports Fund was listed as an interested party in the case.
This follows President Uhuru Kenyatta’s recommendation in June that betting, lotteries and gaming activities should be taxed at the rate of 35 per cent. It was then that SportPesa said they were considering shifting to Tanzania or the UK in a move that could lead to loss of jobs.
SportsPesa Global chief executive officer Gerasim Nikolov at the time said the company would no longer operate profitably under the proposed taxation regime.
“There is nowhere in the world where such a huge tax is levied on turnovers and even here in Kenya, no firm can survive today if a 35 per cent tax was put on its turnover” Nikolov said.
SportPesa Kenya CEO Ronald Karauri argued that the tax cannot discourage betting as it has no direct impact on participants’ earnings as is the case with other sin taxes like excise levy.
“You cannot run a business just to pay tax to the government. It is not worth the sweat and were we not present in the UK and Tanzania, we would just wind up,” said Karauri, who also chairs the Association of Gaming Operators.