SportPesa billionaires take hit from closure
Wealthy and influential investors behind SportPesa are the biggest casualties from the closure of the sports betting platform that was estimated to generate about Sh100 billion in annual sales.
SportPesa on Wednesday declared its 362 workers redundant after a prolonged tax standoff with the Kenya Revenue Authority (KRA), setting stage for its Kenya exit.
SportPesa grew rapidly in Kenya to dominate online betting with the government, KRA and the investigative website, Finance Uncovered, all estimating the firm’s monthly revenues at between Sh6 billion and Sh8 billion —translating to annual sales to about Sh100 billion. The company, however, put its annual revenue at Sh20 billion under what it calls Gross Gaming Revenue.
Before sending its workers home, Sportpesa had questioned the government’s taxation model, saying it amounted to double taxation. For instance, it questioned KRA’s decision to impose a 10 percent Excise Duty on stakes in addition to the betting tax of 15 percent.
FOUNDED IN NAIROBI
Founded in Nairobi as a partnership of wealthy, politically influential Kenyans and Bulgarian investors, SportPesa made its huge fortune from the growing online betting craze in Kenya.
Among the owners the company’s CEO Ronald Karauri, businessman Paul Wanderi Ndung’u and Asenath Wachera Maina, the brains behind the ‘Shinda Smart’ lottery.
Three investors from Bulgaria — Guerassim Nikolov of the ill-fated Toto 6/49 lottery, Valentina Nikolaeva Mineva and Ivan Kalpakchiev — as well as American businessman Gene Grand are also in the list of top shareholders of Pevans East Africa, the entity behind SportPesa.
Two other Kenyans, Francis Waweru Kiarie and Robert Kenneth Wanyoike Macharia, also have minority stakes in the firm, according to regulatory filings at the registrar of companies.
Mr Karauri owns a six per cent stake in Pevans East Africa, the holding company, while Mr Nikolov has a 21 per cent shareholding.
The son of former Tigania MP Mathew Adams Karauri worked at Kenya Airways for more than a decade where he rose to the rank of captain. He left the airline in 2015 to try his hand in the world of betting.
Mr Ndung’u, who has a 17 per cent stake in SportPesa, is a major player at the Nairobi Securities Exchange, where he holds significant stakes in multiple firms. Ms Wacera is the widow of Dickson Wathika, who served as an assistant minister in the President Mwai Kibaki’s government.
In past interviews with Business Daily, SportPesa officials have disputed the mentioned Sh100 billion annual sales, saying the figure was overstated.
They have also questioned the way the company, and the industry is taxed.
“The government should not tax Excise Duty on the entire value of the transaction,” the company has said in earlier communication with the media. “If excise duty is charged on the revenue of the betting company or as winnings for a player, this would amount to double taxation.”
Read full story here.