Kenyan sport betting operator SportPesa will appeal a High Court ruling from last week, according to which the government of Kenya had not breached Constitution by introducing a 35% tax on gambling services provided in the country’s regulated market, local news outlet Daily Nation has reported.
SportPesa had previously turned to the High Court in hopes to overturn the tax increase decision made by Kenyan lawmaker in mid-2017 and signed by President Uhuru Kenyatta. The new 35% tax rate came into effect on January 1, 2018. Here it is also important to note that it applies not just to sports betting, but also to all types of gambling services provided to Kenyan customers.
SportPesa has been among the most vocal opponents of the new tax regime. Shortly after the legislative piece regarding the new tax rate was given the nod by Kenyan lawmakers, the betting operator announced that it would put an end to its sponsorship agreements with local sports clubs. It has reiterated its determination on numerous occasions since then.
According to SportPesa, the new tax burdens the gambling industry more than any other industry in the country. Aside from the newly implemented 35% tax, Kenya-facing gambling operators are also required to pay a 30% corporate tax and to contribute 25% of sales to different social causes, including sports sponsorships. The gambling operator has been arguing that the new regime provides additional and unfair tax burden. SportPesa has pointed out that under Article 201 of the nation’s Constitution, the public finance system is required to promote fairly shared tax burden.
SportPesa’s Next Steps
Casino News Daily reported last week that a High Court judge has sided with lawmakers, saying that he did not find the new taxation system a punitive measure against gambling operators. He went on to say that he did not spot any abuse of the country’s established tax policies. The High Court judge also reiterated the government’s stance that the new tax regime sought to discourage residents of the country from excessive gambling.
As reported by local media, SportPesa will exercise its right to appeal the High Court ruling in a bid to overturn the new taxation regime. The gambling operator, supported by other industry stakeholders operating in Kenya’s regulated market, have been arguing that the new taxation system will not only fail to prevent gambling customers from falling victims to excessive gambling, but will actually drive them to the black market.
Sports betting has become a particularly popular activity in Kenya over the past several years. Its proliferation has been greatly assisted by mobile financial service companies that have been providing bettors with the opportunity to place bets and withdraw their winnings without having to provide bank account information. As a result, mobile betting has grown particularly rapidly in the East African country.
