November 23rd 2017

Sports / Updates

FKF petitions government over proposed betting firms tax hike

In place of an excessive tax regime, Mwendwa has expressed FKF’s commitment to mediate a win-win position that will see betting companies continue to play a sustainable role in sporting development.

By David JagongoThursday, 13 Apr 2017 14:32 EAT

(L-R) Gor Mahia FC staunch fan Jaro Soldier, club chairman Ambrose Rachier and Goma Lotto Easter Special Draw winner George Olweny (in white T-Shirt) sing the 'Gor Anthem' at the cheque presentation ceremony in Nairobi. FKF wants the the proposed 50 percent tax on betting companies reviewed downwards. (Photo: Vincent Munga).

Football Kenya Federation (FKF) has petitioned the government to consider reviewing a recent proposal to levy a 50 percent tax on betting companies. National Treasury Cabinet Secretary, Henry Rotich seeks to increase the current tax rate payable under the Betting, Lotteries, and Gambling Act to 50 percent.

The proposal was contained in the Finance Bill 2017 and announced in the Budget Statement read recently. However, in a swift stakeholder petition, FKF has described the taxation proposal as stringent and likely to stifle sporting development. Speaking when he confirmed the soccer governing body’s concern, FKF President Nick Mwendwa said the proposal may wipe out crucial investments recently undertaken by betting companies.

In place of an excessive tax regime, Mwendwa has expressed FKF’s commitment to mediate a win-win position that will see betting companies continue to play a sustainable role in sporting development.

The federation, he said, is moving with speed to engage the government, with the aim of reviewing the proposal. Betting companies, more so market leader SportPesa, have invested heavily Kenyan sports, especially football. In August 2015, the firm signed a Sh450 million four-year title sponsorship contract with Kenyan Premier League.The firm also sealed a five-year sponsorship deal with Kenya Rugby Union (KRU).

SportsPesa have also penned a shirt sponsorship deal with the national sevens team in addition to sealing a sponsorship contract with a rugby club, Harlequins RFC Back to football, SportPesa have also partnered with Kenyan Premier League clubs with the biggest following in the country- Gor Mahia and AFC Leopards,in addition to sponsoring a smaller team, Nakuru All Stars.

Another betting firm Betway, signed a partnership deal with KPL side Mathare United, coming on board as their official betting partners.
Betika, another betting firm, partnered with Sofapaka FC in a Sh150 million three-year sponsorship deal last month. Goma Lotto, a lottery firm are Gor Mahia FC's marketing partner

The new proposal means that the industry will be taxed half of its gross earnings before expenses including marketing costs and thereafter subjected to a further 30 percent on net profit after deducting all other expenses. The new tax, if implemented means that sports betting firms will not be able to engage with clubs or federations due to budgetary reasons and mostly because they will not be able to directly negotiate for key marketing rights, the federation said..

Currently, FKF is in charge of managing the national teams and of over 6,000 clubs in the country. The federation has been seeking private sector sponsorship in order to grow the sport at a national and grassroots leve. “We support the government’s proposal to introduce a uniform tax across the board on betting, lottery, gaming, and competition industry,” said Mwendwa.

“However, we feel it is important to acknowledge the growth of sports marketing as an industry and also acknowledge that worldwide the private sector plays a big role in developing sports outside what is considered as national assets such as the national, youth and women’s teams”, he said

The implementation of the proposed National Sports, Culture and Arts fund should not curtail the unprecedented growth and beneficial sports sponsorship drive undertaken by the betting, gaming and lottery enterprises,” he explained. Whereas the National Sports, Culture, and Arts fund is a noble idea it captures aspects that don’t reflect sporting activities. "In this perspective the Federation says it will engage the government for a further discussion on the best way to manage sports sponsorship,” said the FA president.

The federation proposes that Government reviews one of its Vision 2030 goals to initiate a sports lottery as a tool to raise funds for development of sports. “It is because of the above-mentioned and the floated idea to have a newly-created National Sports, Culture and Arts fund to support the development of the same that FKF is engaging the government.

Mwendwa underscored the important role betting companies have played and continue to play a key developmental role for Kenyan football despite dwindling fortunes brought about by stiff competition in the market. Implementing the tax proposal as it is, risks seeing many betting companies pull out of the multi-million sports sponsorship deals with both clubs and the national federation.

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