The fallout from Kenya’s new 35 percent gambling tax continued in January, with the Pambazuka National Lottery suspending operations, and resident betting giant SportPesa accused of blackmailing the government by withdrawing sponsorship from local sport.
SportPesa has reiterated its vow to continue appealing the new tax, which PwC says is the highest in the region. However, deputy prime minister William Ruto has since told the firm a new settlement is out of the question.
“Paying taxes is a must, it is non-negotiable,” he said.
Nevertheless, the Association of Gaming Operators of Kenya (AGOK) met with senior government officials to press for a return to the previous rate of 7.5 percent, claiming 10,000 jobs would be lost as operators moved to other markets such as Rwanda or South Africa, leaving a vacuum for black market operators to thrive.
“The 35 percent increase will lead to mushrooming of illegal gambling. This will force some of us to close down or relocate to markets such as Tanzania where taxation is low or scale down operations,” said AGOK secretary Judith Kiragu.
AGOK said it would also reconsider funding local sport if the government lowers the tax rate. Although Ruto says the government is ready to front SH500m (US$4.9m) to plug the gap.
Unlike the Pambazuka Lottery however, SportPesa confirmed it would continue operating as a Kenyan business despite the new tax.