Betting firms urge MPs not to gamble with proposed law

Betting firms want proposed changes to the Betting, Lotteries and Gaming Act shelved. The firms claim they are likely to drive them out of business.

Under the aegis of the Association of the Gaming Operators in Kenya (AGOK), the firms said if passed, the Betting, Lotteries and Gaming (Amendment) Bill, 2016 by Gem MP Jakoyo Midiwo would cripple the local industry while allowing foreign firms to have a grip on the unrestricted online market.

They said some proposals in the bill would also make gambling illegal and infringe on Kenyans’ constitutional rights. The firms at the same time termed the proposed law punitive and impractical.

“The betting lotteries and gaming industry is an industry that is statutorily regulated, yet it appears from a flurry of uncoordinated and incoherent legislative actions that it is an illegitimate of undesirable industry,” AGOK Chief Executive Harrison Ikunda wrote in a memorandum to the National Assembly.

Mr Ikunda was referring to Treasury’s move to increase taxes on the industry last year and a failed attempt by Mr Midiwo to convince his colleagues to form a special committee to investigate sports betting firms against suspected tax evasion and money laundering activities as well as its benefits to society and the State.

WORKABLE FRAMEWORK

If passed into law, the Betting Lotteries and Gambling (Amendment) Bill, 2016 would see the State clamp down on foreign owners of sports betting firms, limit duration players are allowed to conduct business and significantly raise taxes to the industry.

The new proposals also seek to control betting platforms and advertising as well as establish a regulator and do away with the Betting Control and Licensing Board.

“We oppose the bill in its entirety and call for it to be deferred to allow broad-based consultations with all the relevant stakeholders to develop a workable framework to bridge the perceived gap between legislation regulation and industry realities,” said Mr Ikunda in the memorandum.

He said some clauses in the bill limiting ownership of online gambling firms to Kenyans only is contrary to property rights protected under the universal Bill of Rights and the Constitution.

“It is of grave concern to us that the bill proposes in light of the reality of the ownership of the gaming industry in Kenya to limit the shareholding of online gaming licensees to Kenyan citizens. The inevitable result of such a limitation will be the violation of the constitutional protection of foreign investors.”

If the bill is passed into law, some of the leading betting firms such as SportsPesa, which are partially owned by foreign investors, would be locked out.

The bill requires that an online firm must be fully owned by a Kenyan citizen and prescribes sanctions including a Sh15 million fine or a 15-year jail term for a defaulting chief executive.

AGOK has also protested the punitive tax proposals in the bill, especially considering the new tax measures introduced by Treasury Cabinet Secretary Henry Rotich began taking effect this month, yet proposals submitted by Mr Midiwo want to change them.

CS Rotich introduced new tax measures in the 2016 Finance Act that set betting taxes on gaming revenues at 7.5 per cent, lottery tax on turnover at five per cent and gaming tax at 12 per cent. He also set prize competition tax chargeable on the cost of entry to a competition at 15 per cent of total gross turnover.