Safaricom Halts Sportsbook Payments

Safaricom Ordered to Stop Sportsbook Payments

Kenyan telecoms firm Safaricom has been ordered to stop processing payments made to and from unlicensed sports betting companies. The order comes directly from the government amid concerns about, and tighter regulations, on the country’s burgeoning online gambling industry.

Exponential Gambling Growth

Regulators are scrambling to gain control of Kenya’s online betting sector as it continues to expand rapidly, earning combined revenue of KSh204 billion in 2018. Most of the East African country’s population relies far more on smartphones than on desktop devices, meaning that the current mobile revolution has served operators and players well.

Mobile optimised sites like Betin Kenya are more attractive and user-friendly than ever before, and offer better coverage and markets too. This has led to mobile network operators like Safaricom making sizable profits, alongside the bookmakers that they serve.

Kenya’s Tightening Control Measures

Kenyan legislation introduced in May 2019 taxes online sportsbooks more efficiently and effectively, in a bid to use gambling profits to benefit ordinary citizens. In the same way, operators are now required to have a local presence in the country thus stimulating job creation. Concerns over increased gambling addiction and associated problem behaviours, as well as underage betting, are also addressed in new laws.

The Betting Control and Licensing Board, or BCLB, showed how seriously it takes the new measures when it recently refused to renew operating licences for 19 gambling firms. Authorisations for another 27 operators still hang in the balance, as the BCLB has deferred a ruling to a later date in order to give the casinos, sportsbooks and lotteries a chance to comply with new regulations. These are the sites to whom Safaricom has been told to suspend service.

Response to the Safaricom Order

Since Safaricom is the Kenyan mobile communication market’s leading network, most betting sites rely heavily on the company to process payments on the M-Pesa mobile cash platform. Each operator has a unique number called a pay bill. This is used to clear payments made from bettors via their phones, and to pay them out when they win.

Acting BCLB Director Liti Wambua said in a letter to Safaricom that of the 27 gambling companies whose authorisations were under review, none had had their licences renewed yet. Consequently, Wambua continued, the Board requested that the network suspend pay bills and the short codes used to make payments on less advanced mobile phones “until otherwise advised”.

Safaricom responded through their lawyers and said that they would need time to carry out the instructions. Implementing the order too abruptly, they explained, would mean that more than 12 million users would lose the funds they had already deposited in the betting accounts they held with various firms.

Further complicating the situation, Safaricom’s lawyers added, is the fact that 2 of the suspended gaming companies had been granted court orders that allowed them to continue operations without renewed licences. The extent of the industry and economic fallout of operator suspension, and of Safaricom being ordered to cease their services, is yet to be revealed. However, insiders expect it to be extensive and will no doubt be watching with interest as it unfolds.

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