What the 35% tax means to SportPesa and sports sponsorship in Kenya

Gor Mahia's Medie Kagere battles AFC Leopards' Robinson Kamura in a past match. Both teams are sponsored by SportPesa. /ENOS TECHE
Gor Mahia's Medie Kagere battles AFC Leopards' Robinson Kamura in a past match. Both teams are sponsored by SportPesa. /ENOS TECHE

Betting and gaming firms suffered a major blow after the High Court dismissed their legal bid to nullify a law that will raise the tax rate on gambling. The tax hike that imposes a tax of 35 per cent of gross profits on all gambling, is now set to take effect on Monday 1st January 2019

But how exactly does this affect sports in Kenya and more so, the biggest sports sponsor in the country, SportPesa?

Here are a few questions that you may be asking:

1. Will SportPesa pull out of Kenya completely?

Absolutely not. It can be confirmed that SportPesa has no intention of leaving the country. Kenya will remain their base of operations for the foreseeable future.

2. Will SportPesa scale down operations, at least?

The operations of the company remain unchanged for the time being.

3. Is the rumor that SportPesa is now withdrawing all their sponsorship true?

Following the court ruling upholding the 35% tax to be imposed on all betting, lotteries and gaming activities, SportPesa has today communicated to all its local partners its intent to withdraw the full value of our sponsorships as of 1st January 2018.

While it is sad news that the company has to scale down its measure of participation in local sports, it must be appreciated, understandably, that no business can sustain operations under the conditions of this heavy tax burden.

The confirmed withdrawal of sponsorship includes the following entities:

1. Gor Mahia Football Club

Gor Mahia FC celebrate with the SportPesa Super Cup trophy after beating arch rivals AFC Leopards. Photo / SPN

2. AFC Leopards Football Club

3. Nakuru All Stars Football Club

4. SportPesa Premier League (formerly Kenya Premier League)

5. SportPesa Super 8 League

6. Sportpesa Quins (also known as Kenya Harlequins)

SportPesa Quins 2017/2018 captain Patrice Agunda dons the the quad-style kit, an all-time favorite with many Kenyan rugby fans. Photo / COURTESY

7. Kenya Rugby Union

8. Boxing Association of Kenya

9. Football Kenya Federation

10.Rally Driver Leonardo Varese

11.Boxer Fatuma Zarika.

Sportpesa sponsored boxer Zarika Fatuma. Photo / COURTESY

4. Will the tax affect gamers’ winnings?

No it will not. Gamers winnings will not be subject to tax.

Sh22 million SportPesa jackpot winner Elimah Khanaitsa and her husband Ezekiel Besa at Serena Hotel after receiving the cheque. Photo / COURTESY

5. Will SportPesa continue to offer the 10 million Jackpot and the 100 million Mega Jackpot?

Yes. These offerings will remain available to consumers. Again, winners will not be taxed.

SportPesa Mega-jackpot winner Samuel Abisai. photo/PATRICK VIDIJA

6. What effect does the tax have on SportPesa gamers?

At the moment, gamers will not be affected. SportPesa will shoulder the full burden of this tax.