High tax on ‘sports betting’ companies could smock Kenya super league champs out of CAF championship

Gor Mahia ‘Kogalo’ Kenya Super League Champions could bow out of the CAF championship on the back of a sharp tax hike levelled o sports betting companies.

A sharp ‘tax’ increase levelled at sports betting companies in Kenya could harm football clubs, the chairman of Kenyan champions Gor Mahia said. SportPesa, who provide almost EUR5million in sponsorship in Kenya, pulled their financial support following a court ruling upholding a decision to increase the tax rate.

“The impact is devastating to say the least,” said Ambrose Rachier, Gor Mahia’s chairman. I blame the government squarely for the very sharp increase in tax.”

SportPesa had attempted to stop the tax hike arguing that the increase was unconstitutional. However, the High Court dismissed the case with Justice John Mativo ruling that, “no evidence of abuse of tax policy was demonstrated.”

The taxing of bookmakers previously stood at 7.5% of revenues with the government increasing it to 35% representing a 27.5% upward adjustment.

This increase was described by SportPesa as a “huge burden” with its Chief Executive Officer Ronald Karauri telling Reuters news agency that they had no other choice but cut their sponsorship deals to keep costs under control.

“This is a punitive kind of tax coming so abruptly,” said Rachier, adding that his club would be looking into their contract with SportPesa to determine whether the sports betting firm acted legally.

Gor Mahia’s chairman is also not particularly hopeful about the government’s proposed alternative to the previous sponsorship deal.

“The government is in the process of registering some kind of sports lottery to be able to take care of activities such as football sponsorship,” said Rachier. “But I doubt whether such a thing is viable in this country - we have not seen it and they’ve been talking about it for almost the last four years.”

The effect on football in Kenya is likely to be immediate, according to Rachier. His club, the current Kenyan champions, will have to pull out of the CAF Champions League, a tournament featuring the best teams from across the continent’s top leagues.

Kenyan champions Gor Mahia are expected to play Leones Vegetarianos of Equatorial Guinea in February, but the club does not have the funds for flights and accommodation, Rachier said.

“We’ll have no option but to pull out of this tournament,” he said, explaining how the cancelling of sponsorship had hit the club’s income.

Furthermore, SportPesa was the main sponsor for Kenya’s Premier League - a four-and-half year deal worth EUR3.6million that was expected to run until 2019, according to reports in the sports press.

“The Kenyan Premier League is composed of 18 teams and that is also sponsored by SportPesa,” said Rachier. “It means that those clubs will also be negatively affected and therefore football may just take a nosedive in this country.”