• SportsPesa halts operations in Kenya.

• Betin sacks employees after the government fails to renew itself.

• Dire consequences predicted for the country’s sports sector and betting revenue.

SportPesa and Betin, two of the largest and arguably the most popular sports betting brands in Kenya have recently closed shop. The two companies have ceased operations after a prolonged standoff with the government over taxes and they will now no longer offer their services to Kenyan sports bettors. This move might not come as much of a surprise even though both of the companies were just recently cleared to resume operations by the country’s authorities. Their decision to exit the Kenyan market seems to have been the last resort if everything else failed. Well, it seems everything failed.

SportPesa Says Hostile Regulations Are to Blame

The sports betting company decided to end its operations in Kenya but there are plans to make a comeback to the very lucrative gaming market. Its return to the market will, however, be dependent on whether or not the country reconsiders and implements “adequate taxation and non-hostile regulatory environment.”

Currently, the Kenyan government imposes a 20 percent tax on all betting stakes. This has had quite a huge impact on both the firm’s customers as well as the treasury. According to an official statement from the company “the tax is based on a fundamental misunderstanding” of how revenue generation works in the sports betting industry.

The Consequences

SportPesa further noted that compounded by the existing 20 percent Withholding Tax on Winnings, there will be no economic incentive to offer sports betting services simply because players would be deprived of receiving their total winnings.

“This will have severe consequences for licensed betting companies, which dutifully pay their taxes and ultimately will lead to a decline in government tax revenue to near zero and will halt all investments in sports in Kenya,” reads a portion of the firm’s statement.

These claims are quite serious especially for the country’s gaming industry which generates up to an equivalent of $2 billion.

Betin Lets Go of All Its Employees

Betin, on the other hand, took a more aggressive approach by sacking all of its employees in the country. The company stated that they made the radical move due to redundancy, frustration, heavy taxation as well as the government’s failure to renew its operating license. As it turns out, the company’s management has tried to strike a deal with the government. Unfortunately, these efforts have failed to pay off.

“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,” reads a memo from the Betin managing director in Kenya.

Needless to say, the loss of jobs in the sector was expected with the company pointing out that they could only sustain their employees for three more months beginning July. Keeping the employees beyond October will be almost impossible for the Betin.