Sportspesa risks losing license if found guilty of disobeying court order

SportsPesa risks its trading license and Paybills if the regulator finds out the firm is deducting 12.5 per cent excise from wins despite a court order blocking the same. The Star has a letter sent to the sports betting firm by the Betting Control and Licensing Board (BCLB) inviting Milestone Games Limited, a holding firm for Sportspesa to show cause why its license should not be suspended.

In a letter dated November 17, BCLB chairperson Jane Makau wants Milestone Games CEO Ronald Karauri to explain why his firm failed to obey a court order issued in Kakamega where a betting enthusiast Edward Okwama obtained orders blocking deduction of 12.5 per cent excise from wins.

“As you are aware, all licenses are required to hold valid tax compliance certificates by the 2023/24 financial year licensing requirements and regulations as issued by the board by Section 5 of the Betting, Lotteries and Gaming Act,’’

– the letter copied to the chief of staff and head of public service Felix Koskei reads in part.

Apart from explaining why its license should not be suspended, Karauri is expected to physically appear before the BCLB.

“Be notified that should there be a failure by your company to comply with this notice, the board shall proceed with the scheduled meeting and decide on matters in your absence,’’-  the board warns.

The board wrote to the betting company after receiving a letter from the Kenya Revenue Authority (KRA), which had also been barred by the court from claiming12.5 percent excise claims from the bookmaker.

In August, the High Court handed betting fans a major win after stopping the deduction of a 12.5 per cent excise duty on bets. Justice Patrick Otieno directed KRA not to demand the disputed tax until an application filed by a betting enthusiast, Edward Okwama, is heard and decided.

The judge also ordered betting firm Milestone Gaming Limited and Standard Global East Africa Limited not to deduct the amount from betting fans.

Okwama had sued Milestone, Standard Global, KRA, and the Attorney General. In the case, Okwama argued that the current law is unfair as it imposes a blanket deduction irrespective of whether one has won or lost. He further states that the law does not address refunds of the deducted tax when sports are disrupted due to acts of God, such as rainfalls or storms.

Okwama asserted that there should be income or winnings for excise duty to apply. According to him, it goes against taxation principles to demand tax when there’s no income or profit.

“The problematic effect of this provision is that the 12.5 per cent excise duty is levied under paragraph 4A part II on the applicant and other sports betting fans and players when they place a bet or play, notwithstanding if they win or lose their money.”

He said it is discriminatory for the government to demand excise duty on bets when the same principle isn’t applied to other sectors. He lamented that it is a double loss for wagers to pay tax and then fail to win.

He noted that the current tax regime is overly harsh, resulting in double taxation as betting fans must pay 12.5 per cent as well as 20 per cent withholding tax on winnings.

“The multiplicity of taxes levied on sports fans, players, and enthusiasts in the gaming industry is in contravention of the international general principle of neutrality, efficiency, certainty, simplicity, effectiveness, fairness, and non-double taxation in a tax regime,” – he said.

Okwama claimed that over 57 per cent of Kenyan youth above 18 are sports enthusiasts who support local and international football clubs. He argued that the youth place bets for entertainment and economic purposes.


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