Betting firm Sport Pesa is expected to withdraw sponsorship for local sports clubs and unions beginning January due to the 35 per cent tax on revenue.
The withdrawal will begin on January 1, 2018, CEO Ronald Karauri
announced during a meeting at a Nairobi hotel on Friday.
Karauri
noted the cost of doing business will be affected by the finance law that President Uhuru Kenyatta signed on Wednesday, days after he had refused to over the threat of gambling.
"Our cost of doing business will be greatly affected...we have to consider the impact on operating besides partnerships," he said.
"With the new [law]...we want our sports partners to plan accordingly."
Via Twitter, the firm said: "We will be giving notice to clubs and unions that from January 1 we will withdraw all sponsorships."
Sport Pesa's move will affect AFC Leopards, Gor Mahia, the Kenya Boxing League and rugby teams.
The deal with Gor Mahia was for five years at more than Sh200 million while AFC Leopards' was Sh45 million annually for five years.
KPL got a deal worth Sh450 million and KRU more than Sh600 million over a period of five years.
The law raises the tax rate on gambling but sets it at a lower rate than had originally been proposed. It will impose a tax of 35 per cent of gross profits on all gambling.
Until now, lotteries were taxed at five per cent, betting firms - bookmakers - at 7.5 per cent, casino gambling at 12 per cent and competitions like raffles at 15 percent.
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On June 13, Uhuru refused to sign the Bill and recommended that betting, lotteries and gaming activities should be taxed at the rate of 35 per cent.
He rejected it after Parliament deleted a clause designed to discourage youth from engaging in betting.
Treasury CS Henry Rotich had originally proposed raising the tax rate to 50 per cent, saying the rapid growth of on-line gambling hurt the young and vulnerable, and the proceeds from the tax would fund sports, culture and the arts.
The Finance Act seeks to amend the law relating to various taxes and duties. It also seeks to amend laws including: