Minister to petition regulators over 'exploitative' lottery profits

"Some of these lotteries are promoting exploitative profiteering at the expense of ordinary Kenyans. They need to be tamed," he said yesterday.

"If on average two million Kenyans send an SMS at Sh60, a cool Sh120 million is generated per day, or Sh3.6 billion a month. If they take away Sh300 million every month to pay winners, advertising and other charges, they remain with Sh3.3 billion a month. This is a scam," he claimed.

The Assistant minister added: "That is a profit of more than 1,300 per cent and is far bigger than any deal a major company can make in a month. In fact, the big banks make that kind of money in six months, not a single month. This whole matter needs probe," he said.

Kabando wants the Government to compel firms involved in SMS lotteries to make full disclosures on the number of SMS they receive, their incomes as well as expenses.

"These deals are highly suspect. Someone somewhere is patronising this rip-off. There should be a probe into this potential scam," he said.

Cash cows

Chairman of the Betting Control and Licensing Board Lucas Maitha admitted businessmen had turned lotteries into cash cows.

"Some owners are more concerned with making a quick buck and are not keen about transferring 25 per cent of their total incomes into charity as the law requires," he said.

Mr Maitha said the Betting Lotteries and Gaming Act Cap 13i of 1966 had many loopholes.

"We rely on lotteries to tell us how much they have earned that year so that we can calculate what should go to charity. We can’t be sure if they are telling us the truth since the law does not allow us to use independent auditors to check their books," he said.

The requirement of calculating the percentage of income that goes to charity has also become controversial, with some firms claiming it should be a percentage of the net profit and not gross.

"The law is very clear that we should be working with gross profits and even the Attorney General has confirmed it. We shall not let lottery companies get away with that," he added.

The board recently suspended the licensing of new lotteries saying it wants to sort out the regulatory framework and enforce compliance by current operators.

Single month

But Home Affairs PS Ludeki Chweya dismissed Kabando’s concerns, saying there was no law barring anyone from making billions of shillings in a single month.

"We cannot complain someone is making too much money. We can only intervene when we see that the relevant law has been breached," he said.

But he promised to study the petition that Kabando plans to present to his ministry and see if action could be taken on issues that violate the law, if any.

Kabando said he opted to file the petition after some parents complained their children were wasting funds by participating in lotteries.

He wants a probe undertaken by the Betting Control and Licensing Board to ensure the public is not exploited.

The board is charged with various responsibilities, including changing the notion that gaming is a vice.

It oversees authorisation of lotteries and prize competition as well as eradication of illegal gambling.