Betting giant Sportpesa, has announced that it would be canceling its sports sponsorships. The company made this known via a notice issued to all clubs s well as its partners.
The betting firm made it known that the move was as a result of suffering immense pressure from the Betting Control and Licensing Board in Kenya.
A media statement from Sportpesa, made it known that harsh actions from the regulator (Betting Control and Licensing Board (BCLB)), which include a delayed license renewal as well as the suspension of its pay bill numbers, crippled its business operations.
The withdrawal of Sportpesa’s sports sponsorships, comes after an earlier decision by the High Court to continue taxing winnings in the betting sector.
The betting giant feels undue pressure from the betting regulator; Betting Control and Licensing Board (BCLB) even after its compliance with all the statutory and regulatory requirements.
Its media statement reads, “We have always been compliant with all the Statutory and Regulatory requirements.”
In Sportpesa’s five years on the betting scene, the company has gone on to establish betting platforms across the world in Kenya, South Africa, Tanzania, and the United Kingdom.
The company’s withdrawal of its sport sponsorships might negatively affect its links between local clubs in Kenya as well as foreign big shots like English Premier League Team; Hull City.
Sportpesa has promised to resume its support to clubs as soon as its business operations recover.
Sportpesa, Betway, Cheza and other betting firms, lost their petition on withholding tax after the Nanyuki High Court ruled in favor of the Kenya Revenue Authority (KRA)’s interpretation of the term ‘winnings’.
The Nanyuki High Court settled for Kenya Revenue Authority (KRA)’s definition of winnings which describes them as the “gross gaming revenues”.
The gross gaming revenues are thus subject to 20% withholding tax according to the Finance Act of 2018.
This ruling comes just after two petitions by betting firms to declare the taxation of winnings as unconstitutional.
The petitions which were put forth in October 2018, challenged the constitutional interpretation of “winnings” and suggested that the winnings from lotteries, betting or gaming activities are not income, therefore, should not be subjected to tax under the Income Tax Act.
The petitioners which were betting companies, argued that one cannot levy a tax on betting as it is a habit, not a trade or profession. At the same time, the petitioners sought a refund on unconstitutional taxes levied on winnings by an order of mandamus.
The Nanyuki High Court has affirmed that the duty of determining how taxes are imposed and enforced lies within the National Assembly.
As a result, the collection method enacted by Kenya Revenue Authority (KRA), did not violate the rights of betting companies.
