BLOG: Gambling giant SportPesa’s waterloo was confronting government
The decision by Everton FC to terminate its shirt sponsorship agreement with SportsPesa marks the latest blow to the dwindling fortunes of the once rising Kenyan gambling giant. At £140m (about Sh18.5billion), the agreement signed in May 2017 remains the largest single marketing splurge by a Kenyan company.
Within five years of its founding in 2013, SportPesa had muscled its way to the top and joined a select clique of international corporate giants such as brands such Standard Chartered, Samsung, Chevrolet, Emirates, among others, who use the English Premier League, the world’s most watched football league, to raise awareness of their brands.
According to the investigative website Finance Uncovered, SportPesa made more than Sh 100billion in Kenya alone in 2017, making it the country’s most profitable company. The short and sudden success of SportPesa came in the backdrop of a rise in online gambling among the Kenyan youth fueled mostly by the increased mobile internet access.
As expected, increased corporate visibility of SportPesa and other betting companies piqued the curiosity of the government resulting into heightened scrutiny of their activities.
Leading the charge included the indefatigable Minister of Interior, Fred Matiang’i who warned of rising addiction and suicides, and added that gambling will “destroy the moral fabric” without strengthened regulation.
To stem gambling, which had taken over the country’s youth by storm and burned like the proverbial wildfire, Parliament amended the Betting, Lotteries and Gaming Act and the Finance Act. The amendments introduced a 35% tax chargeable on revenue from betting, gaming, lotteries and prize competitions.
Deeming the amendments as a threat to their business and profits, SportPesa embarked on a misguided warfare against both the Executive and Legislative arms of government.
It filed a myriad of lawsuits against the Kenya Revenue Authority, the Betting Control and Licensing Board, the National Assembly, the Senate and several other Ministries. The High Court dismissed the lawsuits and held that the deterrent tax was neither unfair nor capricious.
SportPesa made a mistake in confronting all the arms of government as opposed to collaborating with them to come up with an acceptable trade-off. A company engaging in the provision of non-essential services such as gambling, and betting cannot engage the government in a warfare expecting to win.