Economy
Bets plunge by Sh240bn after Betin, SportPesa crackdown
Monday April 03 2023
Betting Control and Licensing Board Chief Executive Officer (CEO) Peter Mbugi. FILE PHOTO | JEFF ANGOTE | NMG
Annual sports betting revenues plunged Sh240.7 billion from their peak in 2019 following a government’s policy to clamp down on gambling that triggered the forced exit of Betin Kenya and the temporal closure of SportPesa.
Data from the Betting Control and Licensing Board (BCLB) shows revenues computed from bookmakers and public lotteries fell from a peak of Sh301.3 billion in the year to June 2019 to just Sh60.6 billion in the year to June 2022, reflecting a drop of 79.8 percent.
This is a win for the government that has used higher taxation, restrictions on gambling advertising and strict regulatory compliance to tame betting, after highlighting how it had become a problem for the young and poor.
This saw giants like SportPesa, which made nearly Sh200 billion in sales in 2019, close shop before making a contested return in 2020.
Another top player, Betin Kenya, ceased operations in 2019 after the State ordered telecoms firm Safaricom to stop processing payments for sports betting firms, and deportation of foreign directors.
The plunge in sales and profits is a hit to billionaire owners of the betting firms who reaped outsized payouts, with SportPesa having revealed dividends totalling Sh7.6 billion in the four and a half years to June 2019.
It has also reduced the multi-million shilling payouts that saw some punters get winnings in excess of Sh200 million.
Read: SportPesa bags licence as BCLB backs down
The betting sector regulator attributed the sales plunge to the State-driven crackdown and its effects on dominant operators like Sportpesa and Betin Kenya.
“The number of punters reduced in terms of volumes and numbers after the companies were closed. Quite a number of people did not move. It is likely that they remained to wait for those companies to make a comeback because they had created a lot of interest and attachment to these companies,” BCLB Chief Executive Officer Peter Mbugi told the Business Daily.
In mid-2019, the government through the Interior ministry undertook a widespread crackdown on the gambling industry as it moved to enforce fresh regulations and forced operators to clear outstanding tax arrears.
The BCLB would refuse the renewal of operating permits to 19 gambling firms as the Treasury introduced punitive taxes, including gamblers paying the State a portion of the cash they have set aside in their wallets for betting.
The purge forced bookmarkers such as Sportpesa to close shop and declare its 362 employees redundant after a prolonged dispute with the Kenya Revenue Authority (KRA) over unpaid taxes.
Further to the licence cancellations, the BCLB introduced regulations that curbed outdoors and on social media betting advertising.
“We cracked down on advertising especially through billboards to reduce the accessibility and availability of betting to a significant number of people,” added Mr Mbugi.
Online sports betting companies such as SportPesa grew rapidly before the drastic hike in taxes, riding a wave of enthusiasm for sports.
The government says the gaming industry achieved a combined revenue of Sh204 billion in 2018.
That sparked concern about the social impact of betting, prompting new gambling regulations, including restrictions on advertising.
Betting is popular among young people – employed as well as the jobless — who see it as offering a game-like thrill besides an opportunity to make quick money.
Read: State to scrap betting board, replace it with an authority
The government earlier said 54 percent of Kenyans involved in betting were low-income earners.
While a few punters get lucky and win large sums of money, the activity represents missed opportunities and losses for participants as a whole.
The reduced betting revenues have cut winnings from Sh270 billion in the financial year that ended in June 2019 to just Sh44 billion in a similar period last year.
KRA also faces the prospect of lower revenues with gross gaming revenues—sales after payouts– falling to Sh16.6 billion from Sh31.2 billion in the review period.
The new administration is seeking increased activity in the gambling market and plans to start its own National Lottery.
It has moved BCLB from the Ministry of Interior to Public Service and will be renamed Gambling Regulatory Authority, with the government courting closer ties with the once-detested gambling industry.
