Sports betting giants, SportPesa and Betin, have shut down their operations in Kenya, with Betin firing all 2500 of its employees.
The move comes as a reaction to the Kenyan governments continuous frustration of firms in the betting space, as well as heavy taxation.
SportPesa cited the above as the reason for its exit from the Kenyan market, and stated that it would only resume operations when the government established “adequate taxation and non-hostile regulatory environment.”
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A statement by Ronald Karauri says, “SportPesa is disappointed with the decision by the Kenyan legislature to impose a 20 per cent excise tax on all betting stakes. The tax is based on a fundamental misunderstanding of how revenue generation works in the industry. These taxes have damaging impact on our customers.”
The statement goes on to say, “Until such time that adequate taxation and non-hostile regulatory environment is returned, the SportPesa brand will halt operations in Kenya.”
Betin in turn sent home all its employees saying it had run out of funds to keep them on.
The company failed to strike a deal with the government for more favorable terms, which forced it towards the mass firing.
A memo from Betin’s Managing Director read, “Management has had several extensive meetings with the government entities regarding the company’s licence without much success.”
The memo adds, “Given all these, we have had financial constraint as you might all expect. As a result of the deterioration of the profitability, the management has had to rethink its operating model and to proceed with the exercise of termination on account of redundancy.”
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Betin said it could only sustain its staff for three months since the beginning of July.
The government’s ‘war’ on betting firms took on new energy in July.
Finally the memo read, “We hereby notify you that your positions will be rendered redundant on October 31, 2019. This notice is given in accordance with Section 40 of the Employment Act 2007 and as such the provided for will apply to all staff affected.”
SportPesa said that the 20% tax on winnings will drive down the demand for betting, since it deprives gamblers of their total winnings.
