Kenyan football clubs slam “ill-timed” betting tax introduction

Two of Kenya’s largest football clubs have said the introduction of a 20% withholding tax on sports betting will render most of Kenyan football “unsustainable” and could threaten the long-term future of the Kenyan Football League.

Releasing a joint statement, the chairmen of Gor Mahia and AFC Leopards decried the tax, which is set to be introduced as part of the Kenyan National Assembly’s 2021/2022 budget.

“The enactment of this law will render all clubs currently supported and sponsored by various betting firms unable to continue with their operations,” the club chairmen wrote.

Kenya’s finance bill 2021 amends the country’s Excise Duty Act to include a 20% tax on bets wagered.

The tax was first implemented in the 2019/2020 budget but was later revoked by a parliamentary vote in June 2020 after sports betting operators including SportPesa and Betin pulled out of the country in protest.

However, reports in July suggested the Kenyan government would look to reintroduce the tax towards the end of 2020.

Kenya’s government and the country’s sports betting operators have locked horns on several occasions over the last two years, beginning with the government-led suspension of operator licences in a dispute over unpaid tax.

That dispute has now widened to embroil the Kenyan Premier League (KPI), which has benefitted extensively from sports betting sponsorship, with more than KSH1.6Bbn (£8.5m) being ploughed into the league and its clubs between 2016 and 2020.

“Sponsorships have kept clubs and ostensibly the football league itself in operation and aided in the development of players and clubs,” the clubs wrote.

“This is true for other sports that benefit from similar sponsorships. After a fan-less season due to the Covid-19 pandemic, our clubs have been largely dependent on the support by our sponsorship partners.

“We are not out of the woods yet with an unpredictable future and no foreseeable projected return to full stadia,” the chairmen added.

Gor Mahia and AFC Leopards have a long history of sponsorship deals with sports betting firms, beginning with SportPesa, which also sponsored the KPL. However, the firm cancelled these deals in June 2019, citing “immense pressure” from the Kenyan government.

One year later, the clubs agreed a three-year sponsorship deal with Betsson Group as part of the operator’s expansion into the market via its Betsafe brand.

In an impassioned plea to the Kenyan government, the clubs emphasised the “extremely challenging” financial times they have experienced during the pandemic, suggesting the 20% tax will force sponsors to pull out of pre-existing deals with clubs.

“It will certainly be an own-goal on Kenyan football as it would disrupt if not force a suspension of the second half of the season,” the clubs wrote.

“This would also adversely affect the much-anticipated 2022 season which was supposed to mark the grand restart of our fully fledged top-flight football in Kenya.

“This is not the first time the excise tax is being proposed for adoption into law, and the wisdom that prevailed in the suspension of the act previously, given the projected impact on the sports sector, needs to prevail yet again,” the clubs concluded.