Sport betting giant SportPesa is among 97 companies that risk closure after the government failed to renew their licences for the current financial year ending June next year.
In a letter addressed to the head of legal secretarial services of Safaricom, which owns mobile money transfer service M-Pesa, the chairperson of the Betting Control and Licensing Board (BCLB) Cyrus Maina said only three companies had been licensed for the 2022-23 financial year.
“The board hereby notifies you that only the following gaming operators have been found to be compliant with the Betting and Lotteries Act as well as the operating requirements issued by the board as at July 1, 2022, and therefore, their 2022-23 licences have been renewed,” said the letter to Daniel Ndaba dated July 1, 2022.
“Please be informed accordingly and take necessary action.”
The betting operators whose licences have so far been renewed are Shop and Deliver Ltd, the owners of Betika; Pesa Bets Ltd that runs Betafrique and Silicon Solutions Ltd which operates Spotika platform.
Interior Cabinet Secretary Fred Matiang’i said in a statement on May 31 that despite efforts to regulate the betting and gaming industry, unlicensed companies have tried to sneak in and operate illegally.
“This provides a fertile avenue for money laundering, tax evasion and the financing of criminal and other undesirable activities,” he said.
BCLB was directed to ensure that all applications for renewal and new licences from July 1 have written compliance from Kenya Revenue Authority, The Financial Reporting Centre and the Inter-Agency Security Team.
“The BCLB to continuously monitor, identify and report to the Communications Authority of Kenya (CA) all unlicensed local and foreign betting and gaming websites for blockage of access,” said Dr Matiang’i.
The new development is likely to re-ignite another round of war between the government and betting companies.
Betting firms licensed for the year that ended on June 30 published by BCLB were 100 from 76 in a similar period in 2020. This means that the number of betting firms had increased by 31.5 per cent.
An investigation by The Standard in June found that numerous illegal betting and gaming companies are operating in Kenya, some of which are even using M-Pesa, although they have no permanent residence in Kenya and are not regulated by BCLB.
It showed that betting companies had devised new ways of clandestinely operating in Kenya without paying taxes.
These companies, the investigation revealed, allowed punters to transact using hard-to-trace cryptocurrencies.
This might cost the country billions of shillings in uncollected taxes while laundering funds earned through illegal activities such as smuggling and trafficking in minerals, wildlife, drugs, and people, or financing organised crime.
It is a situation that not only cast a spotlight on sports betting as an avenue for money launderers but also how the gambling craze is aided and abetted by newer, sleeker financing schemes such as cryptocurrencies that authorities are yet to fully understand.
The fact that most betting casinos operate on the borderless, largely lawless internet has seen a lot of bookmakers operate in Kenya without paying the requisite taxes or following regulations.
Punters have also been revelling in this tax truancy, which has meant that their winnings can neither be taxed nor traced.
The use of untraceable cryptocurrencies such as bitcoin leaves KRA in a fix, not only because the bookmakers are registered outside Kenya, but also because even if KRA had a tax information exchange agreement, there is no paper trail to show the source of the transaction.