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Ugandan Government Takes Control of Gambling Sector

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Ugandan authorities are clamping down on gambling activities. In January 2019 David Bahati, the country’s Junior Finance Minister, announced plans to ban issuing operating licences to new or recurring applicants. More recently, Finance Minister Matia Kasaija wrote to the country’s Lotteries and Gaming Regulatory Board to reinforce the ban following its Cabinet endorsement and resolution.

When current licences expire, according to the letter, the state will hold a countrywide monopoly on sports betting activities. One of the main motivations for this appears to be concern over capital flight, or rapid flow of money out of a country. Sites like Betway Uganda and other leading sportsbooks also welcome bettors from across Africa, and this sees income flow freely out of Uganda and into other regions. Player safety is also a concern.

Capital Flight Keeps Soaring

Official 2014 estimates suggest Uganda loses around Shs1.05 trillion in dividend payment to shareholders annually. However, foreign companies’ footprint in the country is expanding very rapidly and could cause the losses to double. At the end of May, Bahati revealed that the government is taking serious action to curtail capital flight, and is currently drawing up a set of guidelines on the matter.

The government has also proposed the National Investment Policy to boost the economy. Still awaiting approval, it focuses on development through private sector efforts. Since the primary objective in the sector is profit, it is believed that organisations will be able to focus on quality and stem corruption. For its part, government will be required to render better infrastructure and regulatory frameworks.

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Gambling Sector Guidelines

Bahati has explained that the capital flight prevention guidelines would start with the gaming industry because it’s relatively “easy to control” but said that the measures would extend further. Interestingly, the betting industry is not to be driven by the private sector as outlined in the National Investment Policy. Instead, as per Kasaija’s letter, the state will hold a monopoly.

The latest figures from the Lotteries and Gaming Regulatory Board show that the annual Ugandan spend on gambling is at least Shs150 billion. Predictions for the global market are that it will be worth $635 billion by 2022, so the revenue in Uganda is likely to keep climbing. With such profit potential, the government is making moves to get the lucrative industry under its control.

There are also growing concerns about problem gambling among young people in the country. The authorities’ publicly stated aims are to streamline operations, stem capital flight, and provide protection and support for those with gambling problems. However, rumors of corruption abound and many people feel that the vibrancy of the industry will be lost if the state monopoly comes to pass.

Regulation Remains Complicated

Research fellow at the Economic Policy Research Centre at Makerere University, Paul Lakuna, says there are historic economical structures contributing to Uganda’s current situation, and that blaming it all on capital flight is over-simplistic. However, he adds that tighter regulations and fewer major players would make the sector safer and fairer.

As with almost all current issues in gambling, the situation is difficult to navigate. Free movement is important, but so is transparency and player protection. The sector could be a very important revenue generator, but then those funds need to be properly spent for the good of every citizen. Further developments in the situation in Uganda, and other African countries will no doubt be watched with interest.

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