Kenyan operators on a collision course with government?

Kenyan online and retail sports betting operators may be on a collision course with the Kenyan government following failed litigation against hefty tax increases and threats to discontinue sponsorships for local clubs and sports federations.

On Saturday Sports Principal Secretary Kirimi Kaberia said that threats to remove sports sponsorships were “regrettable” and indicated that the Sports Ministry is set to engage with operators to better understand their issues.

“It is certainly not good news for local sports that some sponsors want to pull out. At this point, we need everybody to continue supporting our federations and clubs,” he said speaking in Nairobi. “In this regard, the ministry will engage all those affected by the new tax regime to see how best to sort out the issue.”

Pevans East Africa Limited, the company that owns online betting firm SportPesa, has reiterated its threat to cancel all existing financial sponsorships agreements made in the country following the imposition of a 35 percent tax rate from January 1 – a significant rise from the previous rate of 7.5 percent.

The trade association to which SportsPesa belongs challenged the tax rise in the Kenyan High Court last week and lost (see previous report).

SportPesa CEO Ronald Karauri has repeatedly warned that the radical increase in tax will deprive operators of profits and the motivation to continue with both sponsorships and operations. He reacted to last week’s negative High Court judgement on the issue by faulting the court’s decision, but said he would issue an official statement early in the new year.

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