Chaos reigns in Kenya, after major operators SportPesa and Betin suspend all betting operations and exit market after the introduction of yet another stinging tax.

In July the Kenyan Betting Control and Licensing Board (BCLB) suspended the license of SportPesa and 26 other operators, in a dispute surrounding the withholding of a 20% winnings tax. The license suspension was later lifted, though the BCLB insisted SportPesa needed to apply for a new sports betting license.

At the start of this month, SportPesa indicated it would restart betting operations in Kenya, which it had unilaterally halted (read more) – with the operator having seemed to have caved in and agreed to pay the disputed tax.

However, reports now suggest that the company, and fellow bookies Betin, have completely given up on any attempts to operate in the country after the introduction of an additional 20% excise tax on all betting stakes.

A SportPesa statement said the Kenyan treasury fundamentally misunderstood how revenue generation works in the bookmaking industry.

SportPesa argues that the new tax, combined with the withholding tax on winnings that was re-introduced last year, will quite simple remove any reasonable economic incentive to bet.

SportPesa and Betin accounted for around 60% of the Kenya betting market, and their departure will come as a severe blow to sports clubs, especially football clubs, who rely on their sponsorship money.

AYO.NEWS says:

We have to admit, the exact situation in Kenya right now seems extremely confused and chaotic, and we can’t help but sympathise with SportPesa and Betin. Are the Kenyan authorities seriously insisting on a 20% tax on stakes and a 20% tax on winnings? If so, they clearly do not understand the first thing about how bookies generate revenue!

Right now, it is unfortunate for Kenyan punters and especially for the sports clubs that rely on betting sponsorship, and will likely see illegal betting boom, with all the problems that entails, but legitimate operators are probably better off out of the market.

AYO.NEWS says features the opinion of the author and does not necessarily reflect the views of Pentagon Digital Limited.