Kenya’s largest betting firm by market SportPesa has finally sent home all of its 400 employees following its effortless attempt to chart down the government over its stringent betting tax regulations.
The gaming firm had a hard decision to make, only to reach a conclusion on October 2 to release all its employees through a meeting convened by SportPesa CEO Ronald Kirauri.
SportPesa made a resurgence in the Kenyan market after Kenya Revenue Authority (KRA) gave it a nod to continue with betting business. It was declared a tax compliant by KRA only to be denied a license by the Betting Board and Licencing Board (BCLB).
It was required to apply for the license which they did almost immediately. However, the company took too long to negotiate with the regulator before finally giving up.
On September 27, SportPesa put to a halt its operation in Kenya after long months of protracted legal battle with the government over tax regulations.
The decision came along with the cited hostile regulations by the government, following a requirement by Treasury that all winnings on a bet should be imposed a 20% excise tax.
However, the company’s woes were blamed on ousted National Treasury Cabinet Secretary Henry Rotich for the move saying that he misunderstood how revenue generation works in the bookmaker industry.
“The tax is based on a fundamental misunderstanding by the Rotich led Treasury of how revenue generation works in the bookmaker industry. This decision will have a damaging impact on both customers and treasury” stated SportPesa in a statement.
Despite massive layoffs that are currently being witnessed in the country, the government has maintained the hard line on betting firms claiming that they failed to prove they were tax compliant as required by BCLB.
The probe by the multi-agency team found that the betting companies made Ksh204 billion last year but only paid Ksh4 billion in taxes.
The 400 jobs lost are also at the mercy of recession in the country, where tens of companies have laid-off workers. Economic analysts have attributed this to the demonetization which reached its deadline on September 1.