By Stanley Wabomba
Online sports betting firm SportPesa projects that most gaming firms could close down operations due to heavy taxation if the new 35 percent tax on gambling is implemented in January next year.
Chief Executive Officer Ronald Karauri says the new tax as laid out in the Finance Act 2017 will drive companies offering betting, lottery, gaming and competition activities into losses hence their drastic decision.
He is calling on policymakers to review the tax.
The president last month signed into law the Finance Bill 2017 that among others requires betting, lotteries, competition and gaming activities be taxed at a flat rate of 35 percent.
This means that come January 2018, all gambling activities will attract a 35 percent gaming revenue tax on net collections.
Two weeks ago, SportPesa said if the new tax measure is imposed, then the online sports betting firm would pull out all sponsorship programmes in Kenya.
Friday, SportPesa said the new tax is punitive and a danger to sport sponsorship.
“This tax will lead to loss of government revenue in the long run, lead to a rise in illegal betting and will also roll back on sports tourism gains,” said SportPesa Chief Global Marketing Officer Joyce Kibe.
Based on this, SportPesa Global CEO Gerasim Nikolov says the online sports betting firm will shut its Kenyan operations and concentrate on other markets if the 35 percent tax on gambling activities comes into force.
The betting firm also has operations in Tanzania, South Africa and the United Kingdom.
SportPesa Kenya Chief Executive Officer Ronald Karauri says no business can survive a 35 percent tax on their net revenue hence their decision.
He proposes that the new tax is reviewed.
Karauri said: “We are comfortable with tax being levied on our profit but not our revenue.”
He also calls for sustainable regulation to enable companies plan with certainty.
Currently, the firm spends about 50 to 60 percent of its profits on sponsorships, estimated at about 800 million shillings.
Currently, the betting firm directly supports about 10,000 jobs.