Betika Faces Tax Claim
In the competition for the largest market shares in the sports betting industry, the government of the East African country of Kenya is currently confronting the bookmaker Betika with a massive tax and penalty demand. Betika's parent company, Shop and Deliver, is challenging this demand by filing an appeal in Nairobi's Tax Court. The Kenyan Revenue Authority (KRA) had already requested Kenyan credit institutions KCB Bank Kenya Limited and Guaranty Trust Bank to transfer all remaining funds from Betika's account to their own.
The KRA seeks a tax of about €7.4 million for Betika's income generated in the last quarter of 2018 alone. In January and February 2019, further sums of around €5.2 million and €2.9 million for missed payments and penalties are due. This adds up to a total of around €15 million – or 1.7 billion Kenyan shillings in local currency – which is about six months' worth of debt.
Betika has asked the court to postpone payment of these sums until the legality of the government's claims has been determined. Two separate legal proceedings have been initiated for this purpose.
Troubled times on the Kenyan sports betting market
The sports betting market in Kenya is currently experiencing difficult times. The government declared war on the illegal sector in the middle of the year and demanded the collection of unpaid taxes amounting to a staggering €1.77 billion. In addition, a ban on advertising was planned to prevent young people from being exposed to gambling.
In response to these measures, gambling companies faced legal resistance. Many providers filed complaints and demanded court action. As a result, a deadline for submitting tax documents was set on July 1, but without success: 27 licensed providers had their operating licenses revoked. New licenses will only be granted if the companies agree to pay a 20% tax on gross gaming revenue.
The Kenyan sports betting market is regulated; all gambling forms are legal if operators have a license and comply with the legal regulations. And of course, this includes the payment of taxes. Because of the more stringent regulation, this market has attracted the attention of the international gambling sector. More than 75% of Kenya's 48.3 million citizens bet regularly. In October, Google also relaxed its advertising guidelines, including for gambling.
Betika's positive stance
Given the recent glut of taxation and regulation, the Kenyan authorities' hardline stance against Betika comes as a surprise. The provider had presented itself as cooperative and groundbreaking in the market in recent months and had accepted the 20% tax levy without difficulty. Betika had its license reinstated and also received praise for its approach to player protection.
Last week, the bookmaker launched an extensive campaign called "Betika na Community" aimed at promoting responsible gambling and giving children and young people the opportunity to participate in sports. The head of marketing, John Mbatia, emphasized that Betika values community engagement. He stated:
"As Betika, we believe in encouraging positive change among youths by creating an environment that champions talent development and sportsmanship."
Mbatia further explained that Betika intends to invest in various sports initiatives and donate money and goods to promote grassroots sports in Kenya. The future of these projects is uncertain, as the ongoing legal disputes could significantly restrict the company's activities.
Companies pull out of the Kenyan market
Not all licensed sports betting providers have responded as positively to the situation. The two market leaders, SportPesa and Betin, have recently exited the Kenyan market. In total, around 2,500 jobs were lost due to their withdrawal. According to SportPesa, the main reason for the withdrawal was the increase in tax rates to 20%. Their tax debt was estimated by the KRA to be around €200 million. The legal dispute between SportPesa and the tax authority is ongoing, and it remains unclear whether the provider will ever return to the Kenyan market.
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Source: www.onlinecasinosdeutschland.com
