While Kenya’s government seems interested in clamping down on any form of gambling by taxing it heavily, sports betting is proving tenacious. It’s also proving that it’s capable of not only surviving but growing.
According to a report by the Betting and Licencing Control Board (BCLB), the number of licensed sports betting firms for the year ending June 2022, had increased to 100, which is 24 more companies than the previous year. Given the circumstances with the government’s attitude towards gambling, this 31.5% growth is remarkable.
This growth projector shows just how attractive the sports betting and gambling industry continues to be – for locals and investors.
Government’s 2021 Slam-Down
In 2021 the Kenyan government rolled out an increased rate in terms of excise duty when it escalated the rate to 7.5%. This means the government collects Sh7.50 for every Sh100 spent by a gambler, irrespective of whether it’s a winning bet or not.
That, however, is not where it ends. The government also collects 20% on all winnings. Plus, it charges levies and taxes to betting operators.
This effort to turn gambling and betting into an unattractive affair has however largely failed. Investors in the industry are clearly undeterred when considering the ongoing growth.
Undoubtedly significant for future projections, the 24 firms that newly entered the market over the course of the past year are all owned by local business people. This stat was confirmed by BCLB chief executive, Peter Mbugi.
Local operating companies owned by Kenyans include Mofabet (Johannes Swift), Zukabet (Muvana Limited), Hollywood Bets, Safe Bet, and Unibet. Online betting firms increased drastically in number too. This ultimately led to a combined revenue income of Sh204 billion in 2018 alone.
The enormous success of the industry created concern about the social impact of betting. This led to new and increased gambling regulations including, perhaps most notably, tighter restrictions on marketing and advertising.
Betting has become an activity that is especially popular among the youth. They seem to view gambling and betting as a fun pastime and a way to make a quick buck.
According to the government, as high as 54% of Kenyan betting enthusiasts earn a low-bracket income.
A Clear Craze for Betting
Underlining the betting craze is the fact that Kenyans reportedly spent Sh83.2 billion on bets during the six months leading up to September last year. This figure applies to those bets placed via Safaricom’s M-Pesa platform alone.
According to Safaricom’s report, the monetary value of the bets wagered is increasing at an average of 69% annually.
Even though the Kenya Revenue Authority (KSA) collects 7.5% of the value of bets placed, and over and above the 20% of winnings and corporate taxes, the industry has only continued to experience ongoing growth.
With M-Pesa’s payments, it’s clear to see that betting on sports is now the second-largest line of revenue. It trails consumer-to-business, which saw Sh5.1 billion generated in sales during the six months leading up to September.
What’s interesting to note about this is that Safaricom charges some of the highest fees in the country when compared with other M-Pesa brands.
A recent court case involving the KRA and Pevans East Africa highlighted how lucrative a business gambling and betting is. Pevans East Africa pioneered betting in Kenya via their SportPesa brand.
According to court documents, Pevans accepted Sh149.7 billion in 2018. This makes it the second-largest betting firm trading in the country after Safaricom.