KENYA

Kenya: Betting woes could play Russian roulette on M-Pesa revenues

As the Kenya government struggles with the gaming and betting industry, analysts say M-Pesa revenues might take a hit. An analysis by Genghis Capital, the investment bank, says contributions from the mobile payment solution is set to suffer a decline as betting slows down.

Genghis Capital analyst Patrick Mumu expects the betting and gaming revenue of M-Pesa to fall by 35.5 per cent year-on-year to Sh1.6bn or 4 per cent of the entire revenue.

M-Pesa Revolution

M-Pesa is known to be the most established and popular payment method when it comes to betting fans of Kenya. It has accounted for 7 per cent of M-Pesa revenue for the financial year which ended on 31st March 2019. Nevertheless, the Safaricom’s first half of the financial year till September 30 has experienced significant upheaval in the gambling market.

On the July 1, BCLB or Betting Control and Licensing Board of Kenya declined to renew the license of 27 operators because they had failed to pay their taxes. This then was followed by a regulatory order to Safaricom to stop offering M-Pesa solutions to the companies who failed to pay the taxes. This move has been highly criticised by SportPesa, the largest operator of the country.

The holding company of SportPesa, Pevans East Africa, has sued for breach of rights and loss of business after the decision of the board to suspend the betting shortcodes and pay-bill numbers. The company was started by politically influential and wealthy Kenyans and investors from Bulgaria, but based in Nairobi, capitalising on the growth of craze for online betting.

With time, more and more Kenyans have been taking an interest in online betting and gambling. They are constantly searching for more detailed info about the best roulette sites in Kenya or the best place for sports betting.

The growth of Pevans East Africa was rapid in Kenya and dominated the world of online betting. The government, the Kenya Revenue Authority and Finance Uncovered, the investigative website, estimated SportPesa’s monthly revenues at between Sh6 billion and Sh8 billion. This implies that the annual revenue of the region could be around Sh100 billion.

Betting Industry takes a hit

Genghis Capital strongly believes that this can cause a reduction in the contribution of the betting industry to M-Pesa revenue. Some additional factors have been noted by Mumu, such as the growth of the gambling industry stalling in the 2018-2019 financial year that affected the revenue.

This has been aggravated by the decision of not renewing the license in July, while 35 per cent tax on advertisement for betting could limit the market from going forward.

The gambling and betting contribution might recover from the fiscal year of 2020-2021 of Safaricom, with the revenue increasing to Sh5.7bn and boost growth. It is expected to reach Sh9 billion by the end of 2023-2024.

Privacy of the New Users

Kenya has the primary mobile money ecosystem with more than 90 per cent of the adults transacting money through the platform. However, the taxman has asked for unfettered access to its transaction records in its effort to identify the tax cheats.

It has only been possible through a court order. KRA has set its eyes on this multi-billion dollar informal sector that had been traditionally elusive but makes use of mobile money for transacting money at every turn.

Previously, it was impossible to imagine M-Pesa could infiltrate all aspects of financial life. It had more than 27 million customers by the end of 2015 and had $120 billion. However, the success of M-Pesa has not gone unnoticed.

Gambling Addiction in Kenya

Keyword searches on Google related to betting dominate the daily traffic in Kenya. In Kenya, betting is leading to gambling addiction, particularly among the youth. Many people consider gambling to be a means of transferring wealth from poor people to rich without any kind of economic activities being involved.

Source: standardmedia.co.ke

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