Betting giant SportPesa has pulled the plug on all its sports sponsorships in Kenya after a prolonged tax dispute with local authorities.
SportPesa has been a key financial pillar in the funding of Kenyan sport with sponsorships in football, rugby, and motorsport among others. A company statement said: “We regrettably wish to announce that due to the uncertainty of this situation SportPesa will be cancelling sports sponsorships effective immediately. All clubs and partners will have received notices as provided for in their contracts.”
SportPesa said that it was being punished by regulators following Kenyan government measures to regulate the betting sector. Recent reports have highlighted an epidemic of school children placing bets in the country with street bookmakers, forcing the government to take action. One measure was to make bookmakers prove that they were tax compliant by July 1 in order to receive a new license. SportPesa argued the tax made the market conditions “extremely challenging” to operate within.
The government withheld SportPesa’s license in a clampdown that affected 26 other betting firms. SportPesa however insists that it is tax compliant.
In 2018 SportPesa withdrew Kenyan sponsorships protesting against a 35% blanket tax on all gambling. That protest was supported by football stakeholders who said the funding was needed to support the game. At the centre of the latest SportPesa dispute is a revised tax bill from the Kenya Revenue Authority (KRA) seeking KSH 14 billion (€125 million) in relation to unpaid taxes on player winnings.
The impact of the sponsorship withdrawal on Kenyan football will be signficant. Football Kenya Federation President Nick Mwendwa had already said that the federation (FKF) would face a Sh600 million (€5.2 million) sponsorship loss.
“Without the betting firms, Gor Mahia and AFC Leopards clubs will have no sponsor, Harambee Stars will suffer and our shield tournament will be non-existent,” said Mwendwa.
Two of Kenya’s most successful clubs Gor Mahia and AFC Leopards would be in danger of having to forfeit their local league matches and failing to comply with obligations towards their playing personnel, according to local media. Together they have won 31 of Kenya’s league titles.
SportPesa also has partnerships with Arsenal, Southampton, Everton and Hull City in England as well as Spain’s LaLiga.