Betting firms lose tax row with KRA as Sportpesa cancel local sponsorships

Kenya’s betting industry Friday suffered major blow following a High Court ruling in favour of the Kenya Revenue Authority in a case where the players wanted to pay lower tax amounts.

This is after the High Court ruled that there is nothing unconstitutional about taxing winnings from betting.

Following that ruling, country’s largest betting firm, SportPesa cancelled all sponsorships in the country saying it was operating in a challenging environment hence hurting the business.

“The gaming industry has been operating in an extremely challenging business environment for the past couple of months. Sportpesa as a business has been subjected to punitive measures by regulators such as delayed license renewal and the suspension of PayBill numbers with these actions considerably reducing the level of business operations,” reads in part a statement by the company.

The gaming company indicated the Government’s move to block its PayBill numbers has brought about immense pressure on the business necessitating a re-evaluation of some plans.

George Lesaloi Selelo had on October 12, 2018, filed a petition before the High Court in Nanyuki seeking for orders of declaration that winnings from betting, lotteries and gaming are not income hence should not be subject to tax under the Income Tax Act.

His petition was consolidated with that of Betway that had wanted clarification on the definition of ‘winnings’ as defined under Section 2(b) of the Finance Act 2018.

The government had last year imposed a 20 per cent withholding tax on winnings. The industry, however, disagreed with the definition of ‘winnings’ given by the National Treasury.

Treasury believes that the total amount to the gamers, including the amount they had bet, should be subjected to a 20 per cent withholding tax while the industry says KRA should only tax the winnings. Betting firms, as well as some of their customers, believed that winnings should not include the staked amount.