Without providing an explanation, one of the top betting firms in Kenya has confirmed that it is closing its doors.
In a press release, the Betsson brand Betsafe, which began operations in Kenya in 2020 and struck significant sponsorship agreements with Gor Mahia and AFC Leopards, two of the top football teams in Kenya, said:
“We regret to inform you that Betsafe Kenya will cease its operations effective 14 May 2024. Outstanding player balances will be refunded via M-Pesa to the registered number within 7 days.”
Their departure coincides with government proposals to raise the excise tax on wagering stakes from 12.5% to 20%, which, if approved, would have a disastrous effect on gamblers.
Bettors will now pay KSh 12.5 for every KSh 100 staked, but if the new amendment is approved, they will pay KSh 20.
“The first schedule to the Excise Duty Act is amended by deleting the words 12.5 per cent and substituting thereof the words 20%,” part of the bill states.
Betting firms are currently taxed on the gross gaming revenue — turnover minus winnings paid out — at a rate of 15 percent. They also pay corporate tax on profits at a rate of 30 percent.
Kenyans placed a record Sh88.5 billion through online bets in the full year to June 2023, handing the Kenya Revenue Authority (KRA) Sh6.64 billion in excise taxes in the period from the Sh5.1 billion raised a year earlier.
Betting firms are still required to pay income tax at the standard rate of 16 percent. The taxes add to annual licence and compliance fees that the firms must pay to get BCLB’s approval.
The KRA also requires the firms to withhold 20 percent of the winnings paid out to punters, adding to the 12.5 percent on every betting stake.
Kenya already has some of the highest tax rates on betting in the world and Parliament has in recent years warned that the growing taxes will turn away investors and hurt the KRA’s collections.
Taxes have in the past led to a fall-out between the State and the betting firms, notably SportPesa and Betin, which in turn exited the local market four years ago.
SportPesa has since returned under the brand name Milestone Gaming.
The two firms clashed with the KRA in 2019 over billions of shillings that the taxman demanded, with SportPesa questioning the taxation model.
The 2019 clampdown that saw the deportation of foreign directors of betting firms nearly wiped out the sector following the exit of the then two dominant firms, SportPesa and Betin.
The industry is soaring, with an increasing number of Kenyans taking to gambling in the hope of getting rich quickly
