TAMING GAMBLERS

MPs in fresh bid to tame betting craze

In Summary

•Kenyans seeking to place a bet would have to spend a minimum of Sh50 to participate in a game.

• For the first time, betting firms in the country will be required to pay Sh100 million for gaming securities.

Interior CS Fred Matiang'i.
Interior CS Fred Matiang'i.
Image: FILE

MPs are wagering to see if they can dissuade Kenyans from joining the betting craze with a proposed law introducing tough tax measures and minimum bets to regulate the industry.

The Gaming Bill 2019, which was published on Tuesday, sets hefty licensing fees for companies seeking to set up base in Kenya and raises the minimum amount of a bet.

For the first time, betting firms in the country will be required to pay Sh100 million for gaming securities, to serve as a cushion to gamblers should the betting firms refuse to pay a ‘windfall’.

This is in addition to an annual licence fee of Sh30 million.

Currently, firms operating public gaming (casinos) pay a Sh1 million application fee, Sh3 million licence fee, Sh500,000 annual licence and Sh25,000 for licence renewal.

In a new strategy to reduce the number of young gamblers, the Bill proposes that the minimum bet is Sh50. Currently, one can bet with Sh1 through some betting firms such as betPawa.

Royal Media's Shabiki allows gamblers to spend Sh20, with a possibility of winning a Sh20 million jackpot.

However, at least Sh100 is required to place a jackpot bet with SportPesa.

The Bill, due to be tabled when Parliament reconvenes next week, will further restrict Kenyans’ access to foreign gaming sites.

The move is also meant to retain cash within the Kenyan economy, instead of giving it away to foreign firms.

BETTING WITH SH1

In a new strategy to reduce the number of young gamblers, the Bill proposes that the minimum bet is Sh50. Currently, one can bet with Sh1 through some betting firms such as betPawa.

Royal Media's Shabiki allows gamblers to spend Sh20, with a possibility of winning a Sh20 million jackpot.

However, at least Sh100 is required to place a jackpot bet with SportPesa.

If passed, the law would repeal the Betting, Lotteries and Gaming Act, which was enacted in 1966, on grounds the existing law is outdated.

The Bill would allow Kenyans to co-own part (30 per cent) of the gaming industry by taking up shares in the firms operating in the country.

Gaming operators are currently required to pay 35 per cent corporate tax and contribute 20 per cent of all revenue to a worthy cause.

Operators are supposed to withhold 20 per cent of players’ winnings as part of the taxation policy.

The Bill, which is due for its First Reading, proposes the establishment of The National Gambling Authority, The National Lottery Trust Fund and the Gaming Appeals Tribunal.

The government has suffered setbacks on a number of occasions as it has attempted to introduce stringent measures to control gambling, especially among the youths.

On Tuesday, the High Court declared unconstitutional a proposal by the government to ban outdoor, electronic and online advertising of gambling and betting.

Justice John Mativo held that the directive issued by the Betting Control and Licensing Board (BCLB) was procedurally unfair.

Interior CS Fred Matiang’i on Monday accused the betting firms, which he said owe KRA Sh26 billion in taxes, of frustrating tax collection through unwarranted lawsuits.

He asked the Immigration department to review the work permits of all foreigners applying to do business in the country.

The CS warned that the owners of non-compliant companies will be deported.

Currently, Kenya lacks a proper legal framework to regulate the gaming industry, hence, the move to enact the gaming law.

The proposed law responds to concerns that the existing Act could not be amended piecemeal, as introduced in the Statutes Law (Miscellaneous Amendment), 2019. 

The proposed legislation further seeks to restrict the use of telecommunications platforms as a media for gaming.

In what would also affect advertisements, MPs are seeking to introduce taxation on gaming adverts, on grounds that most of the revenue currently benefits foreign nationals.

Sports committee chairman Victor Munyaka (Machakos Town) told journalists at Parliament Buildings that the Bill seeks to address the menace of addictive gambling.

He said the new minimum betting requirement of Sh50 will save Kenyans money for essentials. Today many ordinary youths bet as little as Sh20 at a go.

“The import of this Bill is to provide a legal framework for regulation and control of gaming activities with a view to developing a responsible gaming industry,” Munyaka said.

He was accompanied by MPs Korei Ole Lemein (Narok South), Charles Nguna (Mwingi West), Jacqueline Oduol (Nominated), Tecla Tum (Nandi) and Lydia Haika (Taita Taveta).

The import of this Bill is to provide a legal framework for regulation and control of gaming activities with a view to developing a responsible gaming industry
Sports committee chairman Victor Munyaka

The government also wants to ensure transparency by establishing a real-time monitoring system that will require full tax disclosures and disclose gaming patterns.

However, companies that sponsor local teams will receive tax rebates as an incentive for support, subject to government approval.

“There will be a transition period of six months before the enactment of the new law so that the companies comply, especially on the percentage to be owned by Kenyans,” Munyaka said.

The Betting, Lotteries and Gaming Act (2016) Cap 131 sets out the rules and regulations of betting, lotteries, gaming and prize competitions in Kenya.

MPs say the current law is archaic, filled with gaps and fails to address modern-day challenges affecting the industry. This is especially true with the disruptive nature of the ubiquitous internet.

Lawmakers have also expressed concerns that the existing law is not aligned to the Constitution and, hence, can be declared null and void.

The Bill also seeks to curb the mushrooming of illegal gaming machines that are largely unregulated.

A major concern is that most of the revenue raised from the industry benefits other countries where the firms’ headquarters are based.

“A number of companies do not declare their earnings. From independent sources, it is approximated that these firms trade Sh200 billion every year but very little of this goes into the state coffers,” Munyaka said.

He sought to allay fears that the firms with deep pockets will fight back to frustrate the enactment of the proposed law.

"We believe that the members of this committee are people of high integrity and will work to deliver this for Kenyans who are heavily indebted as a result of untamed gambling,” Munyaka said.

The proposal will also delineate the functions of the national and county governments regarding regulation of the betting and gaming sector.