CRACKDOWN

Online gamblers cut off as telcos block deposits

At least Sh547.94 million transacted per day to place online bets has been put on hold

In Summary

• Gamblers were denied access to place their bets after telcos suspended paybill numbers of major betting firms in the country

• Sh200 billion is the total amount placed in bets in 2018 of which at least 75 per cent is returned to punters as winnings

A man analyses the odds at a popular betting site
BETTING: A man analyses the odds at a popular betting site
Image: VICTOR IMBOTO

More than half a billion spent daily on online gambling has been stalled in the ongoing tussle between online betting firms and the authorities.

At least Sh547.94 million transacted per day to place online bets has been put on hold as the state continues efforts to crackdown on the Sh200-billion-a-year industry.

Gamblers were denied access to place their bets after telcos suspended paybill numbers of major betting firms in the country.

This was after a government directive ordered the withdrawal of betting codes for 27 gambling companies whose licenses had not been renewed by the required date.

"The licenses of operators were not renewed for the period July 1, 2019 to June 30, 2020,” stated the Betting Control and Licensing Board. “This is to request you, as the communications sector regulator, to duly withdraw the content service provider licences issued to the firms.”

On Thursday, BLCB granted gamblers 48 hours to withdraw funds from betting firms or lose their monies.

This was after giant telco Safaricom plead the government to allow gamers a chance to withdraw cash from their mobile wallets.

“This is to permit you to allow gamers of the subject firms to withdraw any funds they may have deposited in the material period within 48 hours from the date hereof and duly notify them of the same, quoting this letter as authority,” the board’s acting director Liti Wambua stated in a letter dated July 11, 2019.

According to Safaricom the directive stands to affect over 12 million customers, adding that blocking them would expose the company to legal action.

Leading betting firm SportPesa said the BCLB’s actions to block payments were malicious considering their was an existing court order adding that this discourage and disrupt business.

“The prejudicial process that has been followed by the regulator has the potential to drive the industry underground as well as have far reaching repurcussions on the social and economic agenda of the country,” the firm said in a statement to the press.

Sh200 billion is the total amount placed in bets in 2018 of which at least 75 per cent is returned to punters as winnings. That money did not stay with the betting companies.

The balance is classified as Gross Gaming Revenue (GGR). Betting companies have to pay 15 per cent of GGR to government as betting tax along with other additional taxes.

This means Treasury is likely to lose over Sh15 billion in tax revenue annually if the government persists with its effective closure of Kenyan betting companies.

According to court documents, SportPesa, the biggest betting company in Kenya, had Sh20.1 billion in GGR in 2018 and paid the government a total of Sh6.3 billion in tax. Of this Sh3.6 billion was in betting tax, Sh400 million withholding tax on winnings, Sh1.1 billion in corporation tax and Sh270 million in PAYE.