State directive on gambling adverts may affect sports
- Coming nearly a month after Interior CS Fred Matiang'i gave betting companies a three-month notice to be tax-compliant or risk having their licenses suspended, the move appears an act of frustration after efforts by KRA to collect billions in form of tax from betting winners each month hit a snag.
- In my view, the proposals will hurt Kenyan clubs, sports federations and the sports sector in general.
The ban on gambling advertisements on social media, outdoor and stringent control gambling advertisements on broadcast media from end of this month is a double-edged sword.
On April 30, the Betting Control and Licensing Board (BLCB) banned betting advertisements on television during watershed (from 6am to 10pm), and endorsement of gambling operations by celebrities.
The board also directed that all gambling advertisements must be approved by BLCB and must contain warning messages of the possible consequences of engaging in gambling.
The directives are to be complied with on or before May 30. The main reason for BCLB’s directive was that betting is a demerit good, with the potential to cause harm to the consumer.
Whereas betting should be regulated due to the potential risk of addiction, the measures proposed by BLCB are far-reaching and are a threat to the fledgling betting industry in Kenya.
Betting companies pay 15 per cent tax on revenues.
Statistics from audit firm PricewaterhouseCoopers indicate that formal betting industry in Kenya, which paid $28.3 million (nearly Sh2.869 billion) in taxes in 2015 when the sector was enjoying steady growth, is ranked third in Africa after South Africa and Nigeria.
According to a recent report by the audit firm, yearly turnover of the sports betting industry in Kenya is projected to hit $50 million next year as demand grows. By law, betting companies are required to deduct and remit 20 per cent withholding tax on winnings to the tax man.
Other than generating revenue for the tax man, betting companies also benefit associated sectors such as the media through income from advertising.
A casual look at the sports pages of the three leading Kenyan newspapers show that betting companies are some of the biggest and most consistent advertisers.
The same is true for leading television and radio stations. Advertising revenue from betting companies is even higher for some of these media organisations which have online news websites.
After paying a 15 per cent tax on revenues, betting firms pay 30 per cent corporate tax and dedicate a large proportion to social causes like sports development.
Subsequently, Kenyan sports fraternity has benefitted immensely from gaming companies through sponsorships, nurturing of sports talent and corporate social activities.
Betting companies sponsor top Kenyan football teams like Gor Mahia, AFC Leopards, Sofapaka and Mathare United).
Local sports bodies such as Football Kenya Federation, Kenyan Premier League Limited, and Kenya Rugby Union have benefitted through sponsorship from betting companies.
Betting companies have also sponsored boxing and athletics activities in Kenya, and regional football tournament that has given local players a chance to rub shoulders with English Premier League stars, thereby nurturing talent.
Coming nearly a month after Interior CS Fred Matiang'i gave betting companies a three-month notice to be tax-compliant or risk having their licenses suspended, the move appears an act of frustration after efforts by KRA to collect billions in form of tax from betting winners each month hit a snag.
In my view, the proposals will hurt Kenyan clubs, sports federations and the sports sector in general.
Wangare is a sports enthusiast.