Imposing 35 per cent tax on betting firms is counter-productive

 

Dear Mr President,

I have worked in the gaming industry specifically in casinos for over 25 years.

I am therefore deeply saddened by the drastic step to raise the betting tax nearly three-fold to 35 per cent.

This is disastrous for the growth of the gaming and betting industry. It is however not too late for that decision to be reconsidered.

The gaming industry in Kenya has four sub-sectors which include gaming, lotteries, sports betting and prize competitions.

Investor insecurity has reverberated across the sector due to the uncertainty of whether they will be in existence next year or not and we cannot plan for expansion or growth.

The current taxation - which only commenced in 2017 - stands at 5 per cent for lotteries, 7.5 per cent on betting tax, 12 per cent for gaming and 15 per cent for prize competitions.

Loss of jobs

Casinos, which fall under gaming sub-sector, currently pay 12 per cent tax on revenues.

We cannot sustain the 35 per cent gaming tax because we have employed over 10,000 people who earn tens to hundreds of thousands of shillings in salaries every month, and from whom the Government earns millions of shillings in income tax.

We pay food and beverages licenses, levies for utilities and security and 30 per cent in corporation tax like all other companies.

It should be easy to see that we are already contributing immensely to the national kitty, and that the additional taxes do not come close to achieving the intended purpose of stricter regulation.

Regulation in casinos has been in place for over 40 years. It is strong and has ensured that underage players are not allowed into the casinos.

Lower earnings

Overburdening the gaming sector with this tax will impact negatively in four ways. First, we are definitely driving away licensed gaming operators out of Kenya to friendlier countries or out of existence completely.

We are also encouraging the mushrooming of illegal and un-regulated gaming activities because the taxation proposals make it impossible to operate within the law and still be profitable.

Thirdly, we are likely to be exposing Kenyans to off-shore gambling companies including off-shore casino games, which will inadvertently translate to even lower earnings for the country.

In the age of the internet and online money transfers, gamers have a world of options, so the least we can do is try to offer them local options.

Lastly, the losses for the exchequer arising from the above factors cannot be underestimated considering the current level of tax contribution from gaming industry.

The results of which are loss of jobs, loss of tourism opportunities in cities that have developed around the gaming industry such as Lamu, loss off entertainment opportunities as well as stability and security.

Stand to be exploited

Above all there will be an increase in deleterious gambling related incidents.

Since the taxation matter now squarely rests upon you Mr President, it is my appeal that you should stand with the tens if not hundreds of thousands of people who earn a living from the sector.

There is a risk for the Kenyan people who stand to be exploited should they be forced to seek gaming in foreign Kenyan jurisdictions.

Let us fight together for our Kenyan space, engage and consult to look for alternative ways of strengthening the regulatory body to deal with the emerging betting issues especially online and mobile betting to protect the youth and ensure a sustainable economy.

- The writer is the director at Golden Key Casino, Mombasa