Channel taxes on betting towards developing sports, MPs recommend

Betting firm SportPesa worker attends to a telephone at the company headquarters in Nairobi, January 3, 2018. /REUTERS
Betting firm SportPesa worker attends to a telephone at the company headquarters in Nairobi, January 3, 2018. /REUTERS

A House committee has recommended that a considerable portion of taxes generated from gambling should be channelled back to the ministry of Sports to support the youth.

The proposal by the Departmental Committee on Sports, Culture, and Tourism is among a myriad of recommendations it has made to Parliament to consider while amending the Betting, Lotteries, and Gaming Act.

The recommendations were arrived at after the committee reviewed proposed amendments to the Statute law (Miscellaneous Amendment) Bill, 2018, that covers issues on gaming, gambling and betting.

"Having met various stakeholders among them the Association of gaming Operators in Kenya, Kenya Charity Sweepstake and the Betting Control and Licensing Board yesterday, it is the considered opinion of the committee that the proposed amendments do not adequately address the current issues that are affecting this sector," chairman Victor Munyaka said.

He said the proposed amendments are 'piecemeal in nature' and that if only a few amendments were enacted, they would leave the current Act vague and cause conflict among industry players.

Munyaka said the proposed amendments, for instance, do not address the fact that technology has advanced and modern gaming and gambling is largely performed on online platforms.

"There is no law or legal framework under which the online gambling can be adequately checked and regulated and in fact, there is no capacity within the relevant government agencies to monitor, track and regulate any online gambling activity," he said.

He noted that the lack of adequate monitoring mechanisms on online gambling sites makes it hard for the government to levy taxes and protect minors from gambling.

Munyaka said benchmarking with existing best practices before drafting watertight amendments to the gambling laws is necessary.

Additionally, the committee recommends that licensing regulations should be changed to make it easier to monitor and regulate the industry.

To effectively control and regulate the industry, the committee also recommended that the Betting Control and Licensing Board be upgraded to an authority.

"The proposed laws should also envisage the roles of the Communication Authority and Kenya Revenue Authority in licensing and tracking online gaming as well as that of the Central Bank of Kenya in detecting any illegal money laundering incidents," the committee said.

The gambling industry generates billions of shillings annually. Last year alone, the industry generated an estimated turnover of Sh200 billion.

This prompted the government to enact the Finance Bill, 2017 that was signed into law on June 21 last year, pegging a 35 per cent tax on gross profits from gambling.

This saw the betting giant SportPesa withdraw its sponsorship to a number of local football clubs before reinstating it recently.

Before the signing of the Finance Bill, lotteries were taxed at five percent, betting firms - bookmakers - at 7.5 per cent, casino gambling at 12 per cent and competitions like raffles at 15 per cent.

The law also contains a clause that is designed to discourage youth from engaging in betting.

The committee recommended that the taxing regimes for each gambling activity should be varied and not be a blanket 35 per cent.

This, it said, is because gaming, lotteries and price competitions operate under different models.

The committee said amendments on the Statute Law Bill 2018 must embrace best international practices targeting elements such as the location of casinos, the maximum number of gaming facilities in certain county or town so as to address the influx of these facilities.

"Finally, there is need to raise the minimum capital for casinos and betting firms so that the players’ money is secured and the amounts of winnings are honoured," the committee said.

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